Oxfordshire Pension Fund, Oxford, England, is reducing its investments in U.K. companies with links to major oil, gas and mining companies and has ended its dedicated emerging markets equity investments, specifically due to social and governance concerns in China and Saudi Arabia, a spokesman confirmed.
The new investments are run in the portfolios of Brunel Pension Partnership, Bristol, England, a local authority pool of which Oxfordshire is a member. The assets were previously also invested through Brunel.
The pension fund committee agreed this month to move £575 million into sustainable active and passive portfolios aligned with the Paris Agreement, according to a news release Monday.
As part of the changes the fund divested its £95 million ($119 million) active emerging markets allocation. Oxfordshire will no longer retain a specific allocation to emerging markets equities. The investments will be transferred and split between Brunel's active sustainable equity portfolio and a passive portfolio with a benchmark aligned with the goals of the Paris Agreement.
The pension fund's underlying investment managers of the sustainable global equity portfolio can still invest in emerging markets, the spokesman said.
The pension fund will also transfer around £160 million of an active U.K. equity allocation benchmarked against the FTSE 100 index to the pool's active sustainable equity portfolio.
The remaining £320 million in U.K. equity investments will be allocated to a new active U.K. equity portfolio benchmarked against the FTSE 250 index.
The £3.3 billion pension fund invests about 51% of its assets in equities, its largest asset class.
"We recognize the risks to investment performance associated with poor environmental, social and governance considerations and are keen to ensure our investments both deliver the returns to pay the pensions of our scheme members and ensure sustainable improvements for our planet," Bob Johnston, chairman of the pension fund committee, said in the release.
"We are happy that these changes will further decarbonize our investments as well as increasing the investments in those areas vital to allow the world to adapt to the risks from climate change," he added.