London Pensions Fund Authority Annual Climate Change Policy Review

• Exposure to “Brown” sectors less than 2.5% of the £6.05¹ billion fund
• Listed equities on a 1.5˚ decarbonisation pathway
• 98% of investments within Transition Pathway Initiative coverage ranked Level 3 or above

June 17 2020 – The London Pensions Fund Authority (LPFA) has launched its 2019 Policy on Climate Change Review documenting the progress made implementing the Fund’s  Policy on Climate Change.

The Review has been undertaken by Local Pensions Partnership Investments Ltd (LPPI), the LPFA’s delegated investment manager, to help the Fund manage its exposure to the risks posed by Climate Change. The report is part of the Fund’s efforts to support responsible investment within the financial services sector and to respond to member concerns on Climate Change.

The LPFA and 200 + other organisations recently signed the Corporate Leaders Group call for the UK Government to deliver a clean, just recovery supporting quality employment and a more sustainable, inclusive and resilient UK economy. The organisation is also working towards The Planet Mark certification to ensure its business operations are more environmentally sustainable. The Climate Change policy is also due to be refreshed later in 2020.

Robert Branagh, Chief Executive Office, London Pension Fund Authority, said: “While the world is understandably preoccupied by COVID19, the risks posed by Climate Change to society and the financial systems remain profound. It is essential that the LPFA manage these risks to ensure that we can continue to pay our members pensions. As part of our commitment to be a responsible investor, we believe that we should be transparent about our progress. We are taking good steps forward - including committing to Planet Mark certification for our operations - but there is more that we can, and will, be doing.”

Frances Deakin, Head of Responsible Investment, LPPI, , said: “We are reviewing the carbon intensity of the LPFA’s listed equities portfolio annually and seeking to compare the position with decarbonisation trajectories needed to meet the Paris Agreement targets for global temperature increases of well below 2˚C.”

The Fund’s core Climate Change policy objectives are to evaluate and monitor exposure to Climate Change investment risk using appropriate investigative and analytical tools; to manage transition risk (and place conditions on investments in extractive fossil fuel companies) and to engage on key issues (individually and in conjunction with other investors).

The report, covering the year to 31 December 2019, identified several positive developments within the Fund:

Evaluating and monitoring exposure

• As of 31 December 2019, 98% of investments ranked level three or above² in Transition Pathway Initiative (TPI) Rankings, demonstrating companies are taking verifiable steps to understand and act against climate change risk.

• Carbon intensity of the listed equities portfolio reduced by 4% compared to December 2018 with an emissions intensity 44% below the benchmark (MSCI ACWI).

• Study of best practice within LGPS by Unison and Share Action rated LPFA 10^th out of 89 LGPS Funds in England and Wales, noting the Fund as a leader in addressing climate change.

Risk management and portfolio sustainability

• Exposure to “Brown”³ sectors continued to decline to less than 2.5% of the overall Fund. Exposure through listed equities now equates to 0.43% of the Fund, down from just under 0.6% at the end of 2018.

• Exposure to “Green” sectors continues to grow. In Q4 2019, further renewable energy assets were incorporated through infrastructure collaboration GLIL’s minority stake in Cubico (122MW of operating renewable energy assets across 18 sites in the UK).

Active engagement by LPFA

• Continued activism through partnerships with climate focused investor initiatives, including as a contributor to C40 Cities Divest Invest; membership of Institutional Investor Group on Climate Change (IIGCC);

• Signatory to Institutional Investors Group on Climate Change’s Global Investor Statement to Governments on Climate Change;

• Supported 17 shareholder proposals on climate and environmental themes at 14 AGM’S globally;

• LPPI voted against Exxon Mobil Board in response to rejection of proposal at their AGM calling on Company to disclose carbon reduction targets. Poor alignment of interests on carbon policy led to full divestment later in 2019.

^​1 As at 31 March, 2019

² Transition Pathway Initiative Toolkit Rankings;  0 – unaware; 1 – aware; 2 – building capacity; 3 – integrated into operational decisions; 4 – strategic assessment

³ Brown denotes fossil fuel dependent sectors

5 June 2020 – LPFA signs Institutional Investors Group on Climate Change letter to EU leaders calling for a sustainable EU recovery

Today IIGCC has published a letter signed by over 100 investors, including the LPFA, calling for a sustainable recovery from the COVID-19 pandemic. The letter comes from 109 investors, representing €11.9 trillion in assets under management or advice. To put the assets managed by the investors in context, this figure is larger than the combined GDP of Germany, France, Italy and Spain, or three times larger than German GDP alone1. Institutional Investors Group on Climate Change (IIGCC), led on development of the letter, in coordination with Principles for Responsible Investment (PRI) and CDP. Signatories include some of Europe’s largest investors.

Among other points covered in the letter, investors stress the need to ensure “an accelerated transition to a net zero emissions economy in line with the Green Deal and the Paris Agreement.” Conversely that, “recovery plans that overly exacerbate climate change would expose investors and national economies to escalating financial, health and social risks in the coming years.”

Full details of the letter is available here and press release here.

LPFA appoints Robert Branagh as CEO 

London, 23 April 2020

Robert Branagh has been appointed Chief Executive Officer, (CEO) of the London Pensions Fund Authority (LPFA) where he was Managing Director since joining in April 2018. 

The appointment comes following the recruitment of the LPFA’s management team which now includes Peter Ballard, Director of Funding and Risk, Morenike Ajayi, Commercial and Finance Director and Alistair Peck, Member Engagement and Communications. It also follows the successful conclusion of pooling by LPP and the setting out of the new strategic direction for both the Pool and the Fund over the next 3 – 5 years.

According to John Preston, LPFA Chairman, “Robert’s new role reflects the next stage in the LPFA’s evolution. We have recruited a team of highly motivated colleagues to ensure that our organisation continues to deliver value for money, high quality customer service and meet our and LPP’s obligations to members and employers. While his day-to-day activities will largely continue, Robert will also lead on developing the LPFA’s strategic direction, supporting collaboration across the LGPS sector and raising our profile – particularly relating to our Responsible Investment and Sustainability aspirations – across the industry”.

-Ends-

Note to Editors

For further information, please contact:

Alistair Peck, LPFA: 07958 533092

About the LPFA

The London Pensions Fund Authority Fund is a defined-benefit Local Government Pension Scheme. Together with Lancashire County Council, it is also a shareholder of the Local Pensions Partnership, a pensions service provider for LGPS and other public sector pension funds. The LPFA is a Tier 1 signatory to the UK’s Stewardship Code, a signatory of Climate Action 100+, a member of the LAPFF and is a participant in the C40 Cities Divest Invest Forum.

The LPFA fund has over 90,000 members, 142 actively contributing employers and, as at the 31 March 2019 accounts, assets of £6 billion. Together with Lancashire County Council, the LPFA is also a shareholder of the Local Pensions Partnership (LPP). LPP manages the assets of, and administers, as at the 31 March 2019 accounts, the LPFA fund within the £17.4bn AUM pool.

LPFA signs Corporate Leaders Group letter to UK Government calling for a more sustainable, inclusive and resilient UK economy

The LPFA is one of more than 200 businesses and investors to call on the UK government to deliver a recovery from the pandemic which builds a more sustainable, inclusive and resilient UK economy for the future. The signatories come from both multi-national and national businesses, across industry sectors, including energy, finance, consumer goods, retail, construction, water and communication.  The business and investment networks supporting this initiative include The Prince of Wales’s Corporate Leaders Group (CLG), the Aldersgate Group, the UK Green Building Council (UKGBC), Business in the Community (BITC), the Institutional Investors Group on Climate Change (IIGCC) and the Climate Group.

The letter conveys strong support for a plan from the UK Government which includes the following:

• Driving investment in low carbon innovation, infrastructure and industries, as well as improved resilience to future environmental risks.
• Focusing support on sectors and activities that can best support sustainable growth, increased job creation and accelerate both the recovery and the decarbonisation of the economy.
• Including within financial support packages measures to ensure receiving businesses are well managed and their strategies are science based and aligned with national climate goals.

See the letter here for more information: bit.ly/3gBHfPO

The following outlines recent press releases. Don't forget that LPFA also appears in the press on a regular basis

• LPFA commits additional £50m to The London Fund as it makes its first investment
• LPFA appoints Peter Ballard as Director of Risk and Funding
• LPFA is partnering with London pension groups London CIV and LPP to launch fund investing in local housing, infrastructure and business
• John Preston begins role as new London Pensions Fund Authority Chairman
• The London Pensions Fund Authority (LPFA) has appointed Christina Thompson to its trustee board. 
• The London Pensions Fund Authority (LPFA) welcomes a new Managing Director
• London Pensions Fund Authority announces two new board members
• Sir Merrick speech at Heylo Housing launch
• Greater Manchester Pension Fund and LPFA infrastructure joint venture invests in rail
• Statement on Brexit
• Sir Merrick Cockell speech to the Social Housing Finance Conference
• GMPF & LPFA Infrastructure LLP (GLIL) acquires £150m shareholding in UK windfarm
• Greater Manchester and LPFA make their first joint infrastructure investment
• Susan Martin speech to CIPFA Pensions Network: Pension Fund Partnerships
• Michael O'Higgins appointed as LLPP Chairman
• London Pensions Fund Authority Annual Forum 2015 Chief Executive Susan Martin speech
• London Pensions Fund Authority Annual Forum 2015 Chairman Sir Merrick Cockell speech
• London Pensions Fund Authority names acting Chairman
• LPFA and LCPF to appoint Board for £10bn partnership
• Lancashire and London Pensions Partnership to go ahead
• Sir Merrick Cockell's speech to PA Consulting and The Business Services Association Infrastructure summit
• LPFA names Local Pension Board
• LPFA creates alternative credit manager framework
• LPFA appoints Apollo as alternative credit manager
• Lancashire County Pension Fund and LPFA appoint William Bourne as Joint Independent Local Pension Board Chair
• Susan Martin speaks on the right route forward on investment at GovToday's LGPS reform conference
• Sir Merrick Cockell's keynote speech at Infrastructure Investor Berlin Summit 2015 
• Sir Merrick Cockell's speech on Strategic Asset Allocation from the LGC Investment Seminar 
• Greater Manchester Pension Fund and LPFA agree £500m infrastructure programme
• £10bn North-South ALM Partnership shows new way to manage Local Government Pension Scheme assets
• LPFA response to LGPS (Amendment) (Governance) Consultation
• Letter to the Editor - Financial Times