The London Pensions Fund Authority has said it no longer has any extractive fossil fuel holdings in its global equity portfolio, which makes up 46% of the £6.9bn total investments. The news follows the scheme’s net zero commitment made last year. 

 

LPFA, a local government pension fund, introduced a climate change policy in 2017 and committed to reaching net zero by 2050 last year, with an interim target in 2030.  

 

   

At 31 March 2021, only 0.6% of the fund’s investments in listed equities were in traditional energy companies; the MSCI All Countries World Index benchmark contained 3.2%. Last year, the fund already noted that the carbon intensity of its listed equities portfolio was in decline and had been since December 2018. LPFA also said 2.7% of its assets were identified as 'green'. 

 
“We are proud to be making progress on tackling climate change risk and are also pleased that LPPI continue to recognise climate change as being a priority theme for their engagement and stewardship of our assets,” said LPFA chief executive, Robert Branagh. 

 

He explained that engagement remains the fund’s primary approach to driving change, but that it will disinvest “where necessary”.  

In December 2021, Local Pensions Partnership Investments, the investment arm of the pool which looks after the LPFA’s assets, began to exclude extractive fossil fuel companies from the LPPI Global Equities Fund the LPFA invests in. The move followed LPPI’s own net zero pledge in November last year. Previously, in 2019, LPPI had stopped making new investments in thermal coal extraction and divesting existing holdings.  

 

Local authority pension funds find themselves under much scrutiny by their scheme members and the general public when it comes to fossil fuels. Branagh said: “While these recent actions are taken to mitigate the financial risk that climate change poses to the Fund, we know that they will be welcomed by our members who are increasingly keen on seeing the LPFA play a leading role in tackling climate change.”