LPFA set to allocate 5% of its financial resources towards tackling climate changes
London Pensions Fund Authority Embraces Net Zero Strategy
The London Pensions Fund Authority (LPFA) has set a bold commitment to achieve net-zero carbon emissions by 2050 and allocate 5% of its total fund value to climate solutions by 2030.
In 2021, the LPFA pledged to become a net-zero fund by 2050 using the Institutional Investors Group on Climate Change's (IIGCC) Net Zero Investment Framework. The fund's net-zero strategy is a strategic priority, and investing in climate solutions plays a crucial role in this strategy.
The LPFA's commitment of £400m is based on a current holding of around £150m in existing climate solutions assets and an additional £250m to be directed towards environmental assets. However, the actual investments in climate solutions may be "much higher" due to the lack of definitive guidance on what infrastructure or real estate assets can be classed as a climate solution.
The LPFA's investments in climate solutions will include energy efficiency and renewable energy, sustainable industry, transport, reforestation, and wetland restoration projects. The initial goal for investment in climate solutions is based on current IIGCC guidance.
The fund, like many other UK public pension funds, is aligning its strategy with science-based targets for net zero, as advocated by the Science Based Targets initiative (SBTi). This involves integrating climate risk assessments (both physical and transition risks) into their investment strategies and undertaking gradual portfolio reallocations to reduce carbon intensity.
The LPFA participates in ongoing industry and regulatory initiatives to meet these goals. The Local Government Pension Scheme Advisory Board (LGPS SAB), of which the LPFA is a part, has been actively pushing transparency and compliance with climate and sustainability reporting. The board’s July 2025 updates highlight increased asset values and growing workload related to investment oversight, which underscores ongoing efforts to integrate climate goals into pension management.
Leading pension funds have also started reporting annually on their progress, including investment allocations aligned with climate solutions and reductions in portfolio carbon footprints, which is recommended by regulators and trustees. The LPFA plans to follow suit, providing regular updates on its progress towards net-zero and its climate solutions investments.
The UK's Confederation of British Industry published a report this year that concludes every £1 of value generated by the net zero economy creates an additional £1.89 in the wider economy. The LPFA cites this report as evidence of the economic benefits of a net zero economy, emphasizing the potential for growth and prosperity in its transition to a sustainable future.
For the most precise and up-to-date information on LPFA’s net zero and climate solutions allocation progress, direct review of the LPFA’s official reports or communications released after mid-2025 would be necessary. The LPFA manages approximately £8bn in assets and aims to make a significant impact in the fight against climate change while delivering sustainable returns for its members.
- The London Pensions Fund Authority (LPFA) is investing in climate solutions as part of its strategic priority to achieve net-zero carbon emissions by 2050.
- The LPFA's net-zero strategy includes allocating funds to energy efficiency, renewable energy, sustainable industry, transport, reforestation, and wetland restoration projects.
- The Private Equity sector might play a significant role in the LPFA's additional £250m investments towards environmental assets, given the lack of definitive guidance on infrastructure and real estate assets classed as climate solutions.
- The LPFA aims to reduce carbon intensity in its portfolio by integrating climate risk assessments into its investment strategies, following science-based targets for net zero, as advocated by the Science Based Targets initiative (SBTi).
- The LPFA plans to follow the lead of other UK public pension funds and report annually on its progress towards net-zero emissions, climate-change adaptation, and its investments in renewables, biodiversity, and other environmental-science projects.
