London's Local Government Pension Scheme (LGPS) invests £250 million in a fresh climate-centric venture

London's Local Government Pension Scheme (LGPS) invests £250 million in a fresh climate-centric venture

Local Pensions Partnership Investments Launches Climate Fund

The Local Pensions Partnership Investments (LPPI) has announced the launch of its Environmental Opportunities Fund, a new climate fund aimed at addressing environmental and climate-related challenges while generating positive environmental impact alongside financial returns.

The fund, which forms part of the London Pensions Fund Authority's (LPFA) portfolio, is a multi-asset private markets fund that targets environmental investments, including infrastructure, private equity, venture capital, and natural capital. Helena Threlfall serves as the portfolio manager of the Environmental Opportunities Fund.

The strategy of the Environmental Opportunities Fund aligns with the guidance of the Institutional Investors Group on Climate Change (IIGCC). Under IIGCC's Net Zero Investment Framework, pension funds are encouraged to set targets for allocating capital to climate solutions such as renewable energy, energy efficiency, and reforestation.

The £250m investment in the Environmental Opportunities Fund remains aimed at supporting LPFA's commitment to reaching net zero emissions by 2050. The fund supports broader environmental aims, with a focus on private market investments and infrastructure related to environmental impact.

Jo Donnelly, CEO of LPFA, expressed her delight at the step forward in LPFA's net zero commitment, acknowledging LPFA's close work with LPPI to reach this point. Donnelly also emphasized the financial risk posed by climate change to pension funds like LPFA and the importance of taking climate action to protect their members' pensions.

LPFA has made steady progress on its six net zero goals, first outlined in 2022. The allocation of 3% of its £8bn portfolio to the Environmental Opportunities Fund underscores this commitment.

The Environmental Opportunities Fund's investment approach emphasizes allocating capital to opportunities that contribute to sustainable environmental outcomes such as carbon reduction, nature-based solutions, and climate resilience. It also integrates climate risk considerations into its investment process to manage risk and capitalize on opportunities from the transition to a low-carbon economy.

Though the specific fund holdings and precise allocation percentages within the Environmental Opportunities Fund are not detailed in the current search results, comparable pension fund strategies in the UK, including LPPI’s approach in line with local government pension pools, emphasize investment in private markets with a strong environmental impact focus, reducing climate-related financial risks, integrating ESG principles and stewardship to foster sustainable outcomes, and partnership with local impact portfolios and natural capital investments as part of diversification and ESG goals.

LPFA will publish a formal climate solutions target in due course. The Environmental Opportunities Fund continues to target environmental investments, including infrastructure, private equity, venture capital, and natural capital, as it seeks to make a significant impact on climate change while delivering strong financial returns for its members.

1. The Environmental Opportunities Fund, a new climate fund managed by Helena Threlfall, aligns with the Institutional Investors Group on Climate Change (IIGCC) guidance, aiming to address environmental and climate-related challenges in science and business while generating financial returns, as part of the Local Pensions Partnership Investments (LPPI) and London Pensions Fund Authority's (LPFA) commitment to reaching net zero emissions by 2050.
2. The fund, which forms part of LPFA's portfolio, targets environmental investments in the form of infrastructure, private equity, venture capital, and natural capital, integrating climate risk considerations into its investment process to manage risk and capitalize on opportunities from the transition to a low-carbon economy, ultimately supporting broader environmental aims and climate-change solutions in the finance and environmental-science sectors.

Read also: