WE'RE COMMITTING TO NET ZERO

The LPFA Board has announced its commitment to setting net zero by 2050 with an interim target for 2030 as a goal for portfolio emissions.

This is in recognition of the risks that climate change poses to businesses and society and therefore to the financial health of the LPFA Fund. Since 2017, we’ve had a climate change policy in place to help us manage those risks. You can find out about some of the progress here

Our net zero emissions aspiration is the next step in maintaining the long-term financial sustainability of the Fund, protecting our members financial future and being a responsible investor. We will still meet our target returns and pay pensioners their benefits.

To help us reach net zero and play our part in meeting the Paris Agreement aim of limiting global warming to well below 2 degrees, the LPFA Board 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 (NZIF).

The Fund's net zero action plan will be published in 2022.

The Fund has made substantial progress reducing the risk associated with climate change and in February 2022, we announced that we no longer held any extractive fossil fuel holdings in the Fund's global equities portfolio.

Prior to that, 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 compared 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”.

This is a commitment to transition our investments to achieve net zero portfolio greenhouse gas emissions by 2050, or sooner. Among other activities, this can involve:

  • setting interim objectives and targets to reduce emissions on the way to 2050,
  • engaging with companies, asset managers, and others to ensure that their activities are consistent with achieving global net zero emissions by 2050 or sooner
  • setting a target and reducing our operational emissions.

Further details of how we intend to achieve the commitment will be explained in a Climate Action Plan which, as required by the IIGCC commitment, will be published within 12 months.

The IIGCC is a membership body of over 300 asset management companies and pension funds across Europe. It has created the Net Zero Investment Framework (NZIF) to help investors reach net zero. Net zero is a new challenge for all of us and, in line with LPFA strategic intent, collaboration will be important to us in reaching our goal. Each investor will reach net zero in their own way, but frameworks and guidance can help to ensure real progress is made. The NZIF includes a range of guidance including how to tackle lack of data on carbon emissions, metrics which can be used for some of the assets we invest in (sovereign bonds, corporate bonds and real estate), insights on engaging with companies to encourage their move to a low carbon future and content on investing to drive change.

You can find out more about the IIGCC framework here.

In December 2021, LPFA undertook a survey of our suppliers to understand how they are aligned with our net zero ambitions. It’s important to the LPFA that our net zero ambitions are supported by our partners. The table below summarises our main suppliers and identifies if the organisation has their own targets.

This is very much a starting point for us and we will continue to engage with our suppliers to support their move to net zero and evolve our own supply chain governance.


LPFA suppliers

Role

Net Zero Commitment summary

Relevant links

Barnet Waddingham

Actuary

2025

Net zero pledge

BNY Mellon

Custodian

Carbon neutral since 2015

Enterprise ESG report

CEM Benchmarking

Pensions administration benchmarking

No

-

Club Vita Membership

Mortality data analytics

Yes

Net carbon zero by 2021 and lifetime net zero by 2025

Eversheds

Law firm

2050 or sooner

Net zero commitment

Grant Thornton

External auditors

2050 or sooner

Net zero commitment and carbon reduction plan

London Fire Brigade

LPFA office provider

60% by 2025 and zero carbon by 2050

Net zero and sustainability ambitions

Local Pensions Partnership Administration

Pension Fund administration

No


Local Pensions Partnership Investments

Delegated asset manager

2050 with 2030 interim targets

Net zero commitment

South Bank Centre

Event venue

2050 or sooner

Environmental sustainability page

PwC

Internal auditors

2030

Committing to net zero by 2030 report

Experion

Data providers

2030

Carbon neutral by 2030

Wordshop

Website provider

No

Environmental policy

Folio Metrics

CRM database provider

No

-

Hire Space

Virtual event provider

No


Lloyds Bank

Bank

Net zero operations by 2030

Financing a Green Future report

More information about the LPFA's approach to climate change and responsible investment can be found below.


If you are interested in finding out more about climate change, you might like: 

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