Business

Aon and Irish Life put pension cash into climate transition fund

The €500m fund established with Irish Life Investment Managers is first signal investment by new master trusts

Aon and Irish Life Investment Managers are launching a new €500 million climate transition fund with money from their new pension master trust. Photograph: iStock

Dominic Coyle
Mon Apr 8 2024 - 05:00

Professional services firm Aon is putting an initial €330 million into a new €500 million climate transition fund that it is launching alongside Irish Life Investment Managers.

It marks one of the first big investments by an Irish master trust, the new pensions management vehicles designed to improve outcomes for the pension funds of Irish workers.

The fund will aim to support Ireland’s transition to a low-carbon economy with a focus on companies working to achieve the UN sustainable development goals relating to climate action, resource scarcity, healthy ecosystems and basic social needs.

“Increasingly investors want to support the transition to a low-carbon economy and make a positive social impact,” Denis Lyons, head of investment at Aon Ireland said.

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“That’s why we’re launching our new Climate Transition Equity Fund in Ireland with an initial €330 million investment from the Aon Ireland master trust. Through the creation of the new fund, we can create new growth opportunities by investing in companies and stocks that accelerate the move to a more sustainable future.”

Aon Ireland’s master trust is one of 17 that have been established as pensions regulators in Ireland look to consolidate the number of pension schemes in Ireland. There has been concern at the potential for problems with Ireland’s 75,000 mostly small pension schemes, a figure that was very high by EU standards.

The EU Iorp II directive – the second institutions for occupational retirement provision directive – puts in place new, higher governance and risk management standards to maximise consumer protection. These impose significantly higher costs. Master trusts, which manage pension schemes of a number of different employers, are seen as better placed to bear such costs than small independent company pension schemes.

[ Climate and energy ministers commit to accelerating transition to clean energy at IEA meeting ]

Aon says its master trust had total assets under management at the end of last year of more than €2.5 billion, with a further €200 million onboarded by the end of February. “With over 39,000 members, this makes Aon Ireland one of the largest players in the workplace pensions market in Ireland,” it said.

The group said that, working with Irish Life Investment Managers (ILIM), the new fund’s investment strategy uses environmental data and aims to decarbonise over time in line with the intergovernmental panel on climate change’s 1.5°C warming limit and reaching net zero carbon dioxide emissions globally around 2050.

ILIM head of sustainable integration and solutions Alan Duffy said the customised fund would allow investors to “harness the opportunities that moving to a more sustainable future brings and enables its evolution over time”.

Dominic Coyle

Dominic Coyle

Dominic Coyle is Deputy Business Editor of The Irish Times

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