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London Pensions Fund Authority targets net zero by 2050

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The London Pensions Fund Authority (LPFA) has become the latest in the retirement savings sector to set its sights on net zero emissions by 2050, in addition to setting interim 2030 goals towards decarbonising its £6.8bn investment portfolio, it announced yesterday.

In order to reach the goals, the 94,000-member-strong LPFA – which sits in the Local Government Pension Scheme’s Local Pensions Partnership (LPP) pool – said it would adopt the Paris Agreement-aligned Net Zero Investment Framework (NZIF) guidelines developed by the Institutional Investors Group on Climate Change’s (IIGCC).

Launched by the IIGCC in March, the NZIF aims to provide investors with a common approach framework to meeting net zero targets, along with practical tools to decarbonise and invest in climate solutions in a way that is consistent with the Paris Agreement aims.

LPFA chief executive Robert Branagh said it was crucial for the pensions fund to set its sights on net zero, warning that climate change posed “a material risk to society, business and so to our investments”.

“As a responsible investor, it’s our duty to mitigate these risks,” he said. “We’ve made significant progress decarbonising our portfolio to date following the introduction of climate change policy in 2017. Working closely with our delegated asset manager, LPP Investments, we will be developing our net zero action plan over the coming 12 months.” 

LPFA also said it would now be investing in assets which contribute to a lower carbon future as part of its climate transition plans. At present, it said, 2.7 per cent of its entire portfolio was currently identifiable as ‘green’. 

Tony Burdon, CEO at Make My Money Matter – the campaign group pushing for a more environmentally sustainable UK pensions industry – welcomed the announcement as “an important step in the right direction for our increasingly climate conscious pension industry”.

“With new announcements each week, the movement to make our money matter, for pensions to be proud of, continues to build pace,” he said. “It’s now important that these commitments are translated into firm targets and action plans, including urgent delivery against science-based interim milestones.”

LPPI’s net zero pledge

More broadly, meanwhile, LPP Investments also yesterday announced its pledge to reach net zero greenhouse gas emissions by 2050, and that – as a member of the IIGCC – it would be following the NZIF to reach its goals.

“As a manager of large, globally diversified portfolios on behalf of our pension fund partners, we will leverage our scale and influence to ensure we are able to assist our clients to meet their investment objectives, whilst contributing in a meaningful way to the transition to a low-carbon economy and a sustainable climate for the future,” said LPP Investments’ chief executive Chris Rule. “Net zero by 2050 is an ambitious goal – not least as we all seek better data. We believe it is most likely to be achieved if we collaborate, including with our clients, peers and suppliers. The IIGCC framework is well suited to this collective endeavour, as we manage risks, identify opportunities, and support positive and permanent change.”

This article originally appeared at Professional Pensions.