LGPS Central Limited has launched its All World Equity Climate Multi Factor Fund, bringing together £2.1bn of Partner Fund assets under management.
The local authority pension funds that will initially invest in the new LGPS Central Limited sub fund on launch are West Midlands Pensions Fund (WMPF) and Cheshire Pension Fund.
The All World Equity Climate Multi Factor Fund tracks the FTSE All-World Climate Balanced Comprehensive Factor Index, which incorporates three key climate change considerations; carbon emissions, fossil fuel reserves and green revenues.
The Fund has been designed to take into account the risks and opportunities associated with climate change, and at the same time achieve superior investment returns over the long-term.
Mike Weston, Chief Executive of LGPS Central Limited, said: “Being a responsible investor is something that is at the heart of our investment beliefs. 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.”
In a joint statement, Cllr Steve Simkins, Chair of the Pensions Committee at WMPF, and Cllr Carol Gahan, Cabinet Member for Legal and Finance at Cheshire West and Chester Council, noted: “The Cheshire and West Midlands Pension Funds are delighted to be the initial investors in the LGPS Central Climate Factor Fund. This investment signifies a decisive step by both Funds to recognise 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.”
The All World Equity Climate Multi Factor Fund captures through its index design, climate-related factors aimed to protect and enhance returns over the long-term. It’s tilted away from companies with greater carbon emissions and the most carbon intensive fossil fuel reserves and towards those with green revenues, integrating responsible investment factors by design.
The strategy will be managed by LGPS Central Limited’s in-house investment team, with monitoring and ongoing stewardship undertaken in line with the Pool’s responsible investment framework.
Waqas Samad, CEO of FTSE Russell added: “FTSE Russell is pleased to support LGPS Central in implementing its responsible investing strategy. Through a FTSE Russell index that takes into account climate change considerations, LGPS Central is able to increase its investment weightings towards companies that are taking a proactive approach to environmental factors.”