Pension Fund Authority Sets 2050 Net-Zero Goal

23 September 2021 by Acre
blog author

London Pensions Fund Authority (LPFA) has announced plans to bring carbon emissions to a target-based net-zero goal by 2050.

The local government pension fund administrator has set the goal across the LPFA Fund and will also set up an interim target for 2030.  

The organisation will adopt the Paris Aligned Investment Initiative Net Zero Asset Owner Commitment, in line with the Institutional Investors Group on Climate Change (IIGCC) Net Zero Investment Framework, to reach the goal.

The investment initiative provides investors with a common framework to support the journey to reaching net-zero emissions, encouraging them to actively work towards delivering the Paris Agreement goals. Those signed up to the Asset Owner Commitment now have a year to publish their action plan.

The move paves the way to progress the Fund’s ongoing commitment to a low carbon future and managing the financial risks and opportunities that have arisen because of climate change.

The Fund has successfully helped reduce the risk associated with climate change, with just 0.6 percent of the Fund’s investments in listed equities in traditional energy companies such as oil, gas or extractive fossil fuel firms, reported at the end of March. This is in comparison to 3.2 percent for the Morgan Stanley Capital International (MSCI) All Countries World Index benchmark.

A total of 91 percent (by value) of these investments were assessed by the Transition Pathway Initiative as factoring climate change into their operational decision-making. The Fund’s listed equities portfolio’s carbon intensity has been decreasing since annual monitoring began in December 2018.

LPFA is also investing in assets that contribute to a lower carbon future with 2.7 percent of the whole portfolio identified as “Green”.

Robert Branagh, CEO of the LPFA, said: “Climate change poses a material risk to society, business and so to our investments. As a responsible investor, it’s our duty to mitigate these risks.

“We’ve made significant progress decarbonizing our portfolio to date following the introduction of climate change policy in 2017. Working closely with our delegated asset manager, Local Pensions Partnerships Investments, we will be developing our net zero action plan over the coming 12 months. More information will be published when that process is complete.”