City and County of Swansea (Wales) Pension Fund will exclude carbon-related investments from its equity portfolio by July 31, the pension fund said in a statement Tuesday.
The £2.1 billion ($2.6 billion) pension fund will transition £500 million of its investments into a low-carbon index-tracking fund.
"Like many other pension funds, we think carefully about how the investments we manage for thousands of existing contributors and pensioners are able to maximize the required returns, whilst also being mindful of our responsibilities to the environment and future generations," said Clive Lloyd, chairman of the pension fund committee, in a news release.
"The review showed that our investments in carbon-related industries were already 9% below the pension industry average," he added. But, over the coming years, it is important that the world reduces its reliance on fossil fuels and carbon-based products, so it's important that our investments reflect that, too."
In addition to the carbon reduction within its public equity portfolio, the pension fund is also actively seeking to invest in energy-efficient infrastructure projects, including renewables, solar and alternative fuels.
Over the past decade, the pension fund has reduced its carbon footprint by 30%, but it has plans to go even further over the coming years, the news release said.