On the go: The £26.8bn Strathclyde Pension Fund has agreed to a series of commitments to cut its carbon emissions, including targeting net zero by 2050.
The scheme has planned a series of steps to cut the carbon emissions of its investment portfolio, minutes from a pensions committee meeting held on Tuesday showed.
The Local Authority Pension Scheme fund has agreed to set a target of net-zero emissions across its portfolios by 2050, as well as to implement an investment strategy that is consistent with achieving this goal.
It has also committed to reviewing the energy companies in its portfolio, and divesting from them if they do not meet minimum standards set by the scheme together with its investment managers and environmental, social and governance adviser Sustainalytics.
The move followed a motion approved by Glasgow City Council during a meeting on April 1, which asked the pension fund to “make a formal commitment to fossil fuel divestment prior to COP26, with the intention of divesting completely as quickly as possible, and no later than 2029”.
The scheme did not make the commitment, arguing that “whilst divestment from fossil fuels was already happening", it needs to "continue to consider its portfolio to ensure that it was aligned with the commitments that the fund had made”.
Meanwhile, the scheme plans to transition part of its passive equity portfolio to a new sustainable index.
It currently has a 6 per cent strategic allocation to passive equities with Legal & General Investment Management, which is invested according to a RAFI Global Allocation strategy. It has now decided to switch it to the RAFI Fundamental Climate Transition Index, which is due to launch later in 2021 and is expected to target a 30 per cent reduction in carbon intensity at launch, and a further 7 per cent reduction a year after that.
The scheme also agreed to invest in two new funds with an ESG tilt and in a social impact investment company. Specifically, it committed £30m to SEP VI, a growth equity fund managed by Scottish Equity Partners; £20m to the Clean Growth Fund, which invests in early stage companies in the clean technology sector; and £30m to Funding Affordable Homes.
This article originally appeared on MandateWire.com.
