London’s Haringey Pension Fund looks to low carbon investments

£900m asset owner will work with asset manager Legal & General

The £900m (€1.2bn) Haringey Pension Fund in London looks set to invest around a third of its equity assets into a fund benchmarked against the MSCI Low Carbon Target Index, as local government pension schemes across the UK consider similar moves in the wake both of campaigners’ pressure and the UN climate change talks.

Haringey’s pension committee will vote in April whether to benchmark around £240m of its equity assets against a low carbon index once its finance team develops an implementation plan. The fund will also vote on reducing its equity exposure by 5% and moving the money into a £50m renewable energy fund.

Legal & General, the fund’s investment manager, will help it scope out the move. It already does something similar for the Environment Agency Pension Fund, where it runs £200m.

Meryam Omi, Head of Sustainability at Legal and General Investment Management, said that it was in talks with several local authority pension funds on similar moves, saying: “We are seeing increasing demands from our clients in the low carbon product offerings.

“In particular, we are in discussion with several local government pension scheme funds.

“We are also having broader discussions around the impact of climate change. Our last ‘Fundamentals’ thought piece covered this topic and we intend to increase our communication further.”

During Haringey’s pension meeting last week, committee members discussed divestment, focusing on coal and oilsands. In a report prepared for the meeting by the fund’s finance team, it says the fund’s exposure to the fossil fuel sector is £39m. It notes that exposure to coal is relatively small, at just £215,000 and exposure to companies involved in oil sands is £18m.

However, as the fund adopts a passive approach the report says excluding named companies across multiple sectors targeting coal will be challenging.

Speaking to Responsible Investor, George Bruce, head of finance – treasury & pensions, said that pension fund would not divest from coal noting it had very low exposure.

Going forward he said it would work with Legal and General to create an implementation plan to present to the board in April. He said it had been influenced by the work of the Environment Agency Pension Fund and had taken advice from Mercer.

Also, local councillors had expressed interest in such a move.

Ahead of the meeting over 2,300 people had signed a petition calling for divestment. Signatories included local MPs David Lammy and Catherine West.

Speaking to Responsible Investor, West said: “Tackling climate change is one of the greatest challenges this generation faces… It’s fantastic news that Haringey Council is leading the way in developing their own green strategy through the creation of a low-carbon fund. I congratulate their efforts and would urge other local authorities to follow this excellent example.” Link