LPFA commits to net zero and adopts IIGCC’s Net Zero Investment Framework
LPFA announced today its commitment to bring carbon emissions across the LPFA Fund to a target-based net zero goal by 2050 and to set up an interim target for 2030.
To aid the organisation in achieving their commitment to reach this goal, LPFA will adopt the Paris Aligned Investment Initiative Net Zero Asset Owner Commitment in line with the Institutional Investors Group on Climate Change (IIGCC) Net Zero Investment Framework.
The Paris-aligned investment initiative provides investors with the benefit of a common framework to support the journey to net-zero emissions and encourages investors to play their part in delivering the goals of the Paris Agreement. Signatories to the Asset Owner Commitment now have 12 months to publish their action plan.
The move marks the Fund’s next stage in its ongoing commitment to managing the financial risks and opportunities posed by climate change.
According to Robert Branagh, CEO of the LPFA, “Climate change poses a material risk to society, business and so to our investments. As a responsible investor, it’s our duty to mitigate these risks. We’ve made significant progress decarbonizing our portfolio to date following the introduction of climate change policy in 2017. Working closely with our delegated asset manager, Local Pensions Partnerships Investments, we will be developing our net zero action plan over the coming 12 months. More information will be published when that process is complete.”
The Fund has made substantial progress reducing the risk associated with climate change. As at 31 March 2021, only 0.6% of the Fund’s investments in listed equities were in traditional energy companies (i.e. Oil and Gas or Extractive Fossil Fuel companies). This compares to 3.2% for the MSCI All Countries World Index benchmark. Of these investments, 91% (by value) were assessed by the Transition Pathway Initiative as factoring climate change into their operational decision-making. The carbon intensity of the Fund’s listed equities portfolio is in decline, with an ongoing trend of reduction seen since annual monitoring commenced in December 2018.
LPFA is also investing in assets which contribute to a lower carbon future with 2.7% of the whole portfolio identified as “Green”.