UK pension pool launches £2bn climate tilted equities fund as Scotland plans shop window for green investments

LGPS Central, one of the eight UK local authority pension pools, has today launched a new climate tilted global equities fund backed by an initial investment of £2.1bn (€2.3bn) from two of its member funds.

The new All World Equity Climate Multi Factor Fund, tracking the FTSE All-World Climate Balanced Comprehensive Factor Index, tilts investments away from companies with “greater carbon emissions and the most carbon intensive fossil fuel reserves” towards those with greener revenues.

“The LGPS Central Pool is fully aware of the risks and challenges that climate change poses – not only for the planet but also for investment returns – and our new fund enables us to align our shared sustainable investment ethos with our long-term investment goals”, said Chief Executive Mike Weston.

LGPS Central is made up of nine local government pension pots representing £45bn (€49bn) in assets. It’s chaired by former Pension and Lifetime Savings Association CEO Joanne Segars.

Chair and Non Executive Director, Chair of the Nominations committee and member of the Audit, Risk and Compliance and Nominations Committees

West Midlands Pensions Fund and Cheshire Pension Fund are the two that have invested in the new strategy, which will be managed by LGPS Central’s in-house investment team.

The midlands based pool is also one of a host of international investors representing £4.5trn (€5bn) in assets to pre-declare their intention to support the climate lobbying proposal at BHP.Yesterday, the Church of England Pensions Board, which co-filed the proposal at the Anglo-Australian miner, criticised US proxy advisors Glass Lewis and ISS for not supporting it and called on the Principles for Responsible Investment to convene a meeting to address the issue.

Other investors to declare their support for the Australasian Centre for Corporate Responsibility led proposal (ACCR) at BHP includes: CalPERS, Aberdeen Standard Investments, BNP Paribas Asset Management, Aviva Investors, Local Government Super, HESTA and ACTIAM.

The resolution will be heard at the company’s annual meeting next week in London and in Sydney next month.

Meanwhile, Scotland’s First Minister Nicola Sturgeon yesterday launched the Scottish government’s new green investment programme, which aims to match green projects in the country with “large scale investment”.

“Our aim is to take to market a £3bn portfolio of investable projects over the next three years”, Sturgeon said speaking at the at the Ethical Finance conference in Edinburgh.

The first tranche of projects, which will be screened to ensure they align with the EU’s recently delayed green taxonomy, is expected to launch in spring 2020.

It is hoped that the new initiative will help Scotland realise its new Climate Change Bill commitment to achieve net-zero emissions of all greenhouse gases by 2045.

A spokesperson for the Scottish Government told RI that the green investment portfolio is aimed at “capturing and facilitating private investment” rather than the Scottish Government directly investing.