Climate change
The Fund recognises that material climate change risks and opportunities could be experienced across the whole of the fund's investment portfolio. Climate change is also likely to impact the Fund's liabilities. As a result, the Local Pension Committee agreed on 3rd March 2023 to adopt the following Net Zero Climate Strategy and Implementation Plan following extensive engagement and consultation with scheme members and employers:
Pension Fund Net Zero Climate Strategy PDF
Net Zero Climate Strategy Implementation Plan PDF
The Strategy sets out the Fund’s approach to climate change risks and opportunities, targets and measures, decision making and stewardship, engagement and divestment.
The Strategy does not compromise our approach to setting a Strategic Asset Allocation for strong risk-adjusted investment returns. Instead, it looks to complement and deliver positive environmental and social impacts where these are not to the detriment of our investment returns.
The Fund considers climate risk alongside all other risk which the Fund is exposed to. We report on and monitor climate risk and opportunities through the following reports:
Climate Related Financial Disclosures
We have just released our fifth annual Taskforce for Climate Related Financial Disclosures report, showing our dedication to our Net Zero Climate Strategy targets and out openness in managing climate risk across the Fund.
Climate Risk Management Report November 2024
We are pleased to announce that we’re on track with all eight targets that will support our ambition to achieve net zero by 2050, with an ambition for sooner. Here are some key achievements for our in scope investments against the Fund's 2019 baseline:
- The Fund has achieved its first interim target of reducing the weighted average carbon intensity (WACI) by 50% by 2030, with an actual reduction of 52.8%, meaning the Fund is less exposed to carbon price risk for in-scope investments.
- The Fund has also achieved its second interim target of having reduced its financed emissions 40% by 2030, with an actual reduction of the total carbon emissions the Fund is responsible for by 40.4%
- The Fund now has over £1.3billion (circa 20% of the total Fund) directly allocated to climate-related investments across equity, debt, infrastructure and forestry.
- Within the equity portfolio 75.7% of equity financed emissions are considered to be aligned/aligning to the Paris Agreement, or under and engagement programme. This sets the Fund on a positive trajectory to 2050 in supporting real-world change.
Not only are these metrics positive in relation to when the Fund first measured them, these are also far better than any comparable market benchmark.
Climate Risk Management Reports
Previous Climate Risk Management Report's are available here:
Please see How we invest for more information about the Fund's investments.