The London Pensions Fund Authority (LPFA) has pledged to invest around £250m, or 3 per cent, of its £8bn fund value in environmental solutions assets, to support its net-zero ambitions.

Local Pensions Partnership Investments (LPPI), which is responsible for making daily investment decisions for the LPFA, will invest the assets into LPPI’s Environmental Opportunities Fund, under the its whole scheme management approach.

In 2021, the LPFA committed to being a net zero fund by 2050, using the Institutional Investors Group on Climate Change’s (IIGCC) Net Zero Investment Framework to guide its progress.

As part of this commitment, signatories must publish an investment in climate solutions target, which refers to technologies and businesses that mitigate and adapt to climate change, whether renewable energy, energy efficiency, or nature-based solutions, such as reforestation.

LPFA CEO, Jo Donnelly, highlighted the importance of these actions, stating: “The impact of climate change poses a financial risk to pension funds like ours, so we’re taking climate action to protect our members’ pensions.

“Our net-zero commitment means engaging with our existing investment managers to reduce our portfolio carbon emissions while also investing in companies that help our society transition to a low carbon future.

“We’ve worked very closely with LPPI to get to this point, and I’m delighted to see us taking such a step forward in our net zero commitment.”

The LPFA has reported "steady" progress on its six net zero goals published in 2022.

Following the publication of IIGCC’s Climate Solutions Guidance, the fund is taking steps towards setting a climate solutions target, which will be announced in due course.

LPPI Environmental Opportunities Fund portfolio manager, Helena Threlfall, said that LPPI has a long track record investing in private markets, and its fund is focused on “helping clients to invest in an increasing opportunity set of climate investments”.

“The multi-asset fund complements our whole scheme management model and gives us the flexibility to consider a range of different asset types such as infrastructure, private equity, venture capital, and natural capital to achieve the environmental objective of the fund,” she said.

Donnelly said she was “pleased” that LPFA is investing in a cleaner, greener future for its members, society, and future generations.

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