The London Pensions Fund Authority (LPFA), a a defined benefit local government pension scheme fund, has shared its progress report on achieving net zero emissions since initiating the Investor Climate Action Plan in 2022.
Out of six goals set for the listed equity section, constituting roughly half of their assets, the LPFA shared that it has “made good progress that has been made across all goals”.
The LPFA is expanding its efforts to encompass corporate fixed income and over half of its real estate holdings, now totalling over 54% of its portfolio under net zero targets.
Despite facing challenges in defining climate solutions, it has already increased engagement with invested companies and aims to set a target for climate solutions investments with guidance from the Institutional Investors Group on Climate Change’s Net Zero Investment Framework.
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The LPFA outlined progress on its goals, including emissions reduction, alignment with the Paris Agreement, and increasing investments in climate solutions. Notably, emissions intensity in the listed equity segment has already decreased by 75%, surpassing the 2030 target. Additionally, the LPFA shared that it is ahead of schedule in aligning investments with net zero targets and has exceeded interim targets for sector investments and financed emissions alignment.
CEO of the LPFA, Robert Branagh, said: “As active members of the C40 Cities Invest/Divest network and in line with our net zero commitment, we aim to communicate our progress simply and clearly and share our experiences widely with our industry.”
LPFA sets out new responsible investment policy
The LGPS recently launched a new Responsible Investment Policy to integrate ESG factors into investment decisions and stewardship. The policy underscores the LPFA’s commitment to collaboration with like-minded organisations and support for initiatives such as the CDP’s Science-based targets campaign and ShareAction’s Oil and Gas Bank financing campaign.
According to Paul Hewitt, LPFA’s responsible investment manager: “We are using the Institutional Investors Group on Climate Change’s Net Zero Investment Framework to guide us but the guidance on how to define a climate solution was published later than we originally anticipated, and so we were unable to set a target in 2023.
As at September 2023, 4.14% of our total assets were identified as green investments, which we defined as investments in businesses directly contributing to the global transition to a lower carbon economy. This is up from 3% at 30 June 2022.”
