Transport for London Pension Fund is aiming to reduce carbon emissions by more than half by 2030 and fully by 2045, the £13 billion ($17.8 billion) fund announced Oct. 1.
Pension fund trustees said in the release that the net-zero carbon strategy "is without doubt the single most important development in the fund's sustainability to date." The trustees said they began measuring the carbon footprint of the companies it holds following the 2016 Paris Agreement. That led to a coal exclusion policy and having at least 15% of fund assets in ESG investments.
The latest decision to reduce carbon emissions by 55% no later than 2030 and 100% from a 2016 baseline no later than 2045 applies to all fund assets, and "plays an important role in driving the long-term value of the fund's investment portfolio," according to the release.
The goal of net-zero by 2045 is ambitious, the trustees said, but "entirely consistent" with their fiduciary responsibility to earn returns for the fund's long-term financial health.
Separately, Avon Pension Fund, Bristol, England, said Monday that new climate change targets call for reducing absolute emissions in equity portfolios by 43% by 2025 and 69% by 2030, compared to its 2020 baseline emissions.
The £5 billion local government pension fund said in a news release that it plans to be net-zero by 2050.
Avon will transition its £780 million legacy low-carbon equity strategy into a new Paris-aligned benchmark developed by FTSE Russell and Brunel Pension Partnership. The index is designed to reward companies generating green revenues and aligned with the Paris Agreement goals.
Avon said in the release that investing in the PAB the fund should deliver annual emissions reductions of at least 7%.
The pension fund will reduce its allocation to emerging markets because of the challenge of managing the financial risk of climate change, while in developed markets where most of its capital is allocated, "it can exert a greater influence," it said. The pension fund has also made significant progress on emissions reductions by collaborating with the Brunel Pension Partnership, ClimateAction 100+ and Institutional Investors Group on Climate Change.
Brunel Pension Partnership CIO David Vickers said in the Avon release that the new Paris-aligned indexes "provide the industry with fresh tools to implement the Paris Agreement. We call on investors to quickly make use of the benchmarks in their quest to support the climate transition."
Officials at the pension funds could not immediately be reached for further information.