More than 80% of the £8B London Pensions Fund Authority is now managed with climate risk in mind — a major step in its push to align investments with its 2050 net-zero goal.
The LPFA administers the Local Government Pension Scheme (LGPS), which serves more than 100,000 members. In 2021, the LPFA established net-zero targets, pledging to reduce carbon emissions across the Fund to net zero goal by 2050, with an interim target set for 2030. Since then, it has steadily expanded its coverage across other asset classes, working closely with its delegated asset manager, Local Pensions Partnership Investments (LPPI).
In 2021, LPFA, with the support of Local Pensions Partnerships Investments, also announced it will adopt the Paris Aligned Investment Initiative’s Net Zero Asset Owner Commitment, requiring a formal action plan within 12 months.
According to its latest climate progress report, the LPFA has put in place emissions targets or climate action plans for the majority of its portfolio, including equities, real estate, corporate fixed income, and infrastructure assets.
Jo Donnelly, chief executive officer at LPFA called the move a strategic priority. “The investments we make support not only pension payments but also skilled employment, pollution reduction, biodiversity, and energy security.”
As of March 2021, the LPFA has reduced exposure to fossil fuels — just 0.6% of listed equities were in oil and gas companies, compared to 3.2% in the benchmark MSCI ACWI. Notably, its carbon intensity has been in steady decline since 2018.
In June, the LPFA hit another milestone by committing 5% of its fund — roughly £400M — to climate solutions, including renewables, clean transport, and reforestation. That figure is expected to grow as classification guidance evolves.
