The London Pensions Fund Authority allocates 3% to environmental opportunities
The London Pensions Fund Authority (LPFA), an Administering Authority and £8 billion Local Government Pension Scheme (LGPS) fund with over 100,000 members, has committed to investing around £250 million, or 3%, of its £8 billion fund value in environmental solutions assets that will support their net zero ambitions. LPPI (Local Pensions Partnership Investments), which makes day-to-day investment decisions on the LPFA’s behalf, under their Whole Scheme Management approach, will invest the assets into LPPI’s newly launched Environmental Opportunities Fund (EOF).
The LPFA’s Climate Change Policy identifies climate risk as systemic, meaning that it affects all investments. As a part of putting this into action, in 2021, the LPFA committed to being a net zero fnd by 2050 and is using the Institutional Investors Group on Climate Change’s (IIGCC) Net Zero Investment Framework to guide them on their path to net zero.
As part of that commitment, signatories are required to publish a target for investment in “climate solutions”, which refers to technologies and businesses that mitigate and adapt to climate change, whether renewable energy, energy efficiency or nature-based solutions, like reforestation.
The LPFA has made steady progress on the six net zero goals originally published in 2022. Following the publication of the IIGCC’s Climate Solutions Guidance, the fund, working closely with LPPI as fiduciary and pool provider, has now been able to take steps towards setting a climate solutions target which it will announce in due course.
According to Jo Donnelly, CEO of the LPFA, “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.
“We’ve worked very closely with LPPI to get to this point, and I’m delighted to see us taking such a step forward in our net zero commitment. I’m pleased that we are investing in a cleaner, greener future for our members, our society and future generations.”
Helena Threlfall, Portfolio Manager of the LPPI Environmental Opportunities Fund, said: “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. The multi-asset fund complements our whole scheme management model and gives us the flexibility to consider a range of different asset types such as infrastructure, private equity, venture capital and natural capital to achieve the environmental objective of the fund.”
