LPFA cuts carbon intense assets

The London Pension Fund Authority (LPFA) has reduced its exposure to fossil fuel dependent sectors to 2.5% of assets.

In its first annual climate change policy review the LPFA revealed that the carbon intensity of the listed equities portfolio reduced by 4% compared to December 2018, with an emissions intensity 44% below the benchmark.

The review was undertaken by Local Pensions Partnership Investments, the LPFA’s delegated investment manager, to help the Authority manage its exposure to the risks posed by climate change.

At the end of December 98% of investments ranked level three or above in Transition Pathway Initiative Rankings, demonstrating that companies are taking verifiable steps to understand and act against climate change risk.

Robert Branagh, chief executive of the London Pension Fund Authority, said that while the world is understandably preoccupied by Covid-19, the risks posed by climate change to society and the financial systems remained profound.

“It is essential that the LPFA manage these risks to ensure that we can continue to pay our members’ pensions. As part of our commitment to be a responsible investor, we believe that we should be transparent about our progress,” he said. “We are taking good steps forward – including committing to Planet Mark certification for our operations – but there is more that we can, and will, be doing.”