The London Pensions Fund Authority said it is “taking climate action” to protect its 100,000 members from the consequences of global warming.
The London Pensions Fund Authority (LPFA), a local government pension scheme which manages £8bn (€9.4bn) in assets, plans to allocate around 3% of its total value to environmental solutions assets that will boost its net-zero targets.
The £250m strategic asset allocation will be invested by Local Pensions Partnership Investments (LPPI), which makes day-to-day investment decisions on the LPFA’s behalf, via its newly launched Environmental Opportunities Fund.
“The impact of climate change poses a financial risk to pension funds like ours, so we’re taking climate action to protect our members’ pensions. Our net-zero commitment means engaging with our existing investment managers to reduce our portfolio carbon emissions while also investing in companies that help our society transition to a low carbon future,” said Jo Donnelly, LPFA’s CEO.
Long track record
In 2021, the LPFA committed to being a net-zero fund by 2050, using the Institutional Investors Group on Climate Change’s (IIGCC) Net Zero Investment Framework as guidance.
IIGCC signatories are required to publish a target for investment in so-called ‘climate solutions’. These range from technologies to businesses that can mitigate and adapt to climate change, including renewable energy, energy efficiency or nature-based solutions, like reforestation. The LPFA said it would be able to set a target for climate solutions soon.
“We have a long track record of investing in private markets. Building on this, our fund is focused on helping clients, including the LPFA, to invest in an increasing opportunity set of climate investments,” said Helena Threlfall, portfolio manager of the LPPI Environmental Opportunities Fund.
She added that the multi-asset fund complemented its whole scheme management model and provided flexibility to consider a range of different asset types, ranging from infrastructure to private equity, venture capital and natural capital to achieve the environmental objective of the fund.
Fund manager LPPI, which was set up in 2016 to enable UK local government and public sector schemes to pool resources and improve management of their assets, managed £27bn of pension assets as of the end of last year.
