* Covers scheme's entire passive equity portfolio
* Shell, Repsol included due to their climate goals
* FACTBOX on Big Oil's climate targets:
(Adds detail on the mandate, background, context)
By Shadia Nasralla and Simon Jessop
LONDON, Jan 30 (Reuters) - The Church of England's pension
fund has shifted 600 million pounds ($789 million) into a new
equity index that invests in companies deemed to be making
progress towards the targets of the Paris climate agreement.
The index, created by FTSE Russell, includes oil producers
Royal Dutch Shell and Repsol, but not others
such as BP, Exxon Mobil and Chevron.
The move comes a month after Bank of England governor Mark
Carney said the financial services sector had been too slow to
cut investments in fossil fuels.
"(Carney) challenged people to ask what their pension funds
are doing to address the financial risks of climate change,"
said Adam Matthews, Co-Chair of the Initiative and Director of
Ethics and Engagement for the Church of England Pensions Board.
"The message is clear to all publicly listed companies: put
in place targets and strategies aligned to Paris and be rewarded
with inclusion in the Index or work against the long term of
interests of beneficiaries and wider society and be excluded."
The Church's 2.8-billion-pound pension fund said the 600
million pounds represented its entire passive equity portfolio
of investments, which track indexes rather than relying on fund
managers to pick stocks to put money into.
The Church has been active in pressuring oil producers to
improve their climate targets, taking part in shareholder
resolutions at companies including Repsol.
It has also faced criticism in the past for investing in
companies perceived by some campaigners as unethical. In 2018,
the Church said it would keep its investment in Amazon,
despite the Church's leader Justin Welby criticising the U.S.
online retailer for paying low levels of taxes in Britain.
The climate index is based on the London School of
Economics' Transition Pathway Initiative (TPI), which assesses
companies' alignment with the Paris agreement's goal to keep
global warming below 2 degrees Celsius.
"Under the index, the Pensions Board portfolio will have a
49.1% lower carbon intensity than its current passive
allocation," the Church said in a statement, referring to a
measure of carbon emissions to revenues.
"Were the latter companies (ExxonMobil, Chevron and BP) to
set emissions targets covering all their emissions that align to
the Paris Agreement then the Index rules would allow inclusion."
Exxon and Chevron are among firms whose climate policies are
likely to be challenged by shareholders at upcoming annual
general meetings.
Oil companies' climate targets vary - for example in whether
they include emissions resulting from the use of their products
rather than merely their own operations.
($1 = 0.7608 pounds)
(Reporting by Shadia Nasralla and Simon Jessop; Editing by Mark
Potter)
BP (BP.)
