LPFA Plans to Funnel £400m into Climate-Friendly Ventures by 2030
The London Pensions Fund Authority (LPFA), a defined-benefit local government pension fund with £8bn in assets under management, has taken a significant step towards sustainable investing. Guided by the Institutional Investor Group on Climate Change (IIGCC) framework, the LPFA has defined "climate solutions" as a broad set of investment opportunities that support the transition to a low-carbon, net-zero economy.
This definition encompasses sectors such as energy efficiency, renewable energy, sustainable industry, transport, reforestation, and wetland restoration projects. The LPFA's commitment to climate solutions involves allocating approximately 5% of its total assets—equivalent to around £400 million by 2030—to these sectors.
This allocation combines existing investments (about £150 million) and a new £250 million allocation to an Environmental Opportunities Fund launched through its fund manager, Local Pensions Partnership Investments (LPPI). An example of an investment made by LPFA is in GLIL, which includes projects like Europe's largest windfarm, Hornsea 1.
Paul Hewitt, responsible investment manager at LPFA, mentioned that 5% is a great start, and targets may be revised as new guidance emerges and the climate solutions market evolves. The LPFA aims to reduce portfolio emissions by 75% by 2030 and has a net zero target of 2050.
Jo Donnelly, CEO of LPFA, states that net zero is a strategic priority for the fund and investing in climate solutions is a vital part of that strategy. She emphasises that investing in climate solutions is "about ensuring that we invest in opportunities that help us pay members their pensions when they retire," reflecting both fiduciary and sustainability priorities.
The LPFA had initially set net zero targets through its investor climate action plan in 2022. As the fund continues to refine and revise its climate solutions targets, it is expected to align more closely with its net zero objectives. The LPFA's approach to climate solutions investing demonstrates a commitment to both financial performance and climate goals.
[1] London Pensions Fund Authority - Investment Strategy and Governance [2] Institutional Investor Group on Climate Change - Net Zero Investment Framework [3] Local Pensions Partnership Investments - Environmental Opportunities Fund
- The London Pensions Fund Authority (LPFA) is investing in climate solutions, which are defined as opportunities that support the transition to a low-carbon, net-zero economy, by allocating approximately 5% of its assets to sectors such as renewable energy, sustainable industry, and reforestation.
- In addition to their environmental sustainability priorities, the LPFA aims to reduce portfolio emissions by 75% by 2030 and reach net zero by 2050, as they believe that investing in climate solutions is a vital part of their strategy to pay pensions to their members.
- To further its commitment to climate solutions, the LPFA has launched a £250 million Environmental Opportunities Fund through its fund manager, Local Pensions Partnership Investments (LPPI), and has already made investments in companies like GLIL, which includes projects like Europe's largest windfarm, Hornsea 1.
