London CIV hired Baillie Gifford to run its new £485 million ($683 million) active equity strategy.
The LCIV Global Alpha Growth Paris Aligned Fund, launched April 13, was seeded by two of the London-based local authority pension pool's member funds, a news release said. The sub-fund allows member funds to align investments with the objectives of the 2015 Paris Agreement and is a lower-carbon variant of the existing LCIV Global Alpha Growth Fund, launched in April 2016. That fund is also managed by Baillie Gifford and had £2.4 billion in assets as of March 31, 2020, according to the latest available annual review.
Baillie Gifford's investment process includes a quantitative screening to remove companies with particular levels of revenue exposure to fossil fuels, including revenue from exploration, production and services to the sector, the release said. Qualitative screening will be applied to other companies to look at the balance between vital and discretionary emissions, potential emission-reduction pathways and management's openness to adopting low-carbon transition processes.
"As investors, we play an important role in navigating a pathway to net-zero emissions through alternative investment approaches, and we must hold companies to a higher standard of accountability and transparency," Jason Fletcher, CIO at London CIV, said in the release. "The introduction of the LCIV Global Alpha Growth Paris Aligned Fund reflects London CIV's efforts to provide long-term, sustainable investment solutions to our client funds whilst addressing key socio-economic issues and contributing towards the long-term goals of the Paris Agreement."
The pensions pool launched a renewable infrastructure fund, with £435 million of commitments, in the first quarter. Executives are also looking at fixed-income and passive equity funds that will aim to respond to the climate-change challenge.
London CIV's member funds had £44 billion in assets as of Dec. 31.
Spokesmen could not be reached for comment.