LPFA ahead of emissions reduction target for equity portfolio
The £7.7bn London Pensions Fund Authority has succeeded in reducing emissions from listed equity investments by 75% compared to 2019.
The London Pensions Fund Authority (LPFA) has cut emissions from its investment portfolio significantly ahead of its schedule, according to a new report from the organisation.
The £7.7bn local authority scheme published a report on Thursday to highlight how it is on track to reduce total portfolio emissions by 75% by 2030 from its 2019 baseline.
It has already cut emissions from the listed equity part of its portfolio by 75% compared to 2019 figures, well ahead of its 2030 target. The reduction was delivered partly through its managers’ divestment from extractive fossil fuel companies, the LPFA said.
Robert Branagh, chief executive at the LPFA, said: “The impact of climate change brings both risks and opportunities to pension funds and it’s our duty to manage both so that we can continue to pay our members their pensions.
“We aim to communicate our progress simply and clearly and share our experiences widely with our industry. It’s important that members, peers and other stakeholders can understand what we’re trying to do, how we are doing and the challenges that we’re all facing.”
The LPFA said that at least 32% of material sector investments were on track to align to net zero by 2025, while 29.5% of all its listed equity holdings in material sectors are considered net zero, aligned with net zero by 2025, or in the process of aligning themselves. This compares to 14% of the portfolio in 2019, and is ahead of schedule for meeting the LPFA’s interim 2025 target of 32%.
At the end of June 2023, nearly three quarters (72%) of the financed emissions in material sectors in the portfolio were net zero, aligned to net zero, or “under engagement”, the scheme said. This was also ahead of target.
In 2022, the LPFA outlined six goals and targets for the listed equity section of its portfolio, representing around 50% of total assets.
The scheme has increased engagement with portfolio companies and said had made progress in aligning the listed equity portion of the fund with goals of the 2015 Paris Agreement. The LPFA is also working with its investment managers to set a target for investments in climate solutions.