LGPS Central Limited, a company that manages the assets of nine U.K.-based government pension schemes, has launched an equity climate multi-factor fund.
The All World Equity Climate Multi Factor Fund incorporates carbon emissions, fossil fuel reserves and green revenues into its investment strategy, according to LGPS. It will bring together £2.1 billion ($2.5 billion) of assets under management from its partner funds.
The West Midlands Pensions Fund (WMPF) and Cheshire Pension Fund, partner funds under LGPS’ management, will initially invest in the new fund.
Speaking on behalf of the funds, Steve Simkins, chair of the pensions committee at WMPF, and Carol Gahan, cabinet member for legal and finance at Cheshire West and Chester Council, noted, “This investment signifies a decisive step by both funds to recognize the potential to add return from focusing on those companies who are taking a proactive approach to climate change. We particularly welcome the fact that the fund will boost investment into companies generating green revenues; these companies will be the leaders in shaping our future.”
LGPS’ in-house investment team will manage the investment strategy, in addition to monitoring and assuming ongoing stewardship under LGPS’ responsible investment framework.
“Being a responsible investor is something that is at the heart of our investment beliefs,” said Mike Weston, chief executive of LGPS in a statement. “The LGPS Central Pool is fully aware of the risks and challenges that climate change poses — not only for the planet but also for investment returns — and our new fund enables us to align our shared sustainable investment ethos with our long-term investment goals.”
LGPS manages approximately £40 billion ($49 billion) of assets and is equally owned by eight of its nine partner funds. The company uses the combined buying power of its partner funds to reduce costs, improve investment returns and widen the range of available asset classes for investment, according to LGPS’ website. Its partner funds include: the Cheshire Pension Fund, Derbyshire Pension Fund, Leicestershire Pension Fund, Nottinghamshire Pension Fund, Shropshire Pension Fund, Staffordshire Pension Fund, West Midlands Pension Fund, West Midlands Integrated Transport Authority Pension Fund, and the Worcestershire Pension Fund.
