The London Borough of Hackney’s pension fund will carbon footprint its portfolio and move its investments into low-carbon strategies as part of an overhaul of its investment approach.
The pension fund in east London, which has some £1.2bn (€1.4bn) under management, will launch a new investment strategy in January – partly in response to a triannual review. The update will for the first time include a formal policy statement regarding fossil fuel investments.
As part of the move, a request for proposals (RFP) was issued last week by Hackney for carbon footprinting services, expected to look at Scope I and II emissions. It comes as in the US, New York’s pension funds are currently embarking on a similar process to find a carbon footprinting service provider.
In addition to carbon footprinting its portfolio and formalising its approach to fossil fuels, Hackney also said it will “review options” for its passive UK equity mandate and “consider options for an initial active investment of approximately 5% of the fund in a sustainability/low carbon or clean energy fund(s)”.Hackney in June moved £10m out of a plain vanilla real estate fund managed by Columbia Threadneedle Investments into the same firm’s Low-Carbon Workplace Fund. It plans to increase this, and has the board’s permission to move a further £15m into the low-carbon fund, “as and when the fund has projects available for investment”.
“Positive investment in low-carbon or clean energy funds”
The push follows a strategy meeting in January, in which Hackney’s pension fund invited representatives from the Environment Agency’s pension fund, and a number of environmental and investment experts to discuss the role of fossil-fuel investment in relation to fiduciary duty.
“The outcome of this meeting was a series of resolutions around future work streams designed to help the fund fully understand its carbon footprint and the risks this poses, and, over the longer term, promote decarbonisation of the portfolio through positive investment in low-carbon or clean energy funds,” it said.