Newham council has taken a key decision to invest £520m of its pension fund in companies across the globe that are well run, socially responsible and active at fighting climate change.
The fund, launched by major City financial Institution, Legal and General Investment Management (LGIM) is the Paris Aligned World Index fund.
It is aligned to climate outcomes agreed to at the International treaty on Climate change, Conference of Parties (COP 21) in 2015. Commonly referred to as the Paris Agreement. LGIM aims to align the investments with radically reducing the world’s carbon emissions to help prevent a catastrophic rise in the Earth’s temperature over 2°C, whilst delivering the strong and stable returns desired by the Newham Pension Fund.
Using this fund will see the Newham Pension Fund substantially reduce its carbon footprint whilst helping promote the benefits of environmental, social and good governance. The new investment avoids investment in tobacco, oil and gas, coal and controversial weapon systems.
The Newham Pension Fund has a continued commitment towards addressing climate change. A commitment that sees over £200m of other assets invested in a socially aware manner.
Commenting on the launch, Councillor Nareser Osei, Chair of Newham Pensions Committee, said:
“The Newham Pension Committee has sent a powerful message that the Newham Fund is a pioneering responsible investor in companies that are: GOOD at managing climate risks, GOOD to their workers and GOOD at the way they run their business as these are all vital ingredients for delivering GOOD long term investment returns that make for an affordable and sustainable Pension Fund.”
Councillor Terence Paul, Cabinet Member for Finance and Corporate Services said:
“This investment decision sends a strong signal that the Newham Pension Fund is a pioneering responsible investor committed to managing climate risks while at the same time exploiting the investment opportunities that it presents. In addition this fund will help create better conditions for workers and promote better governance. This fund embraces the Councils values and will play a key role in delivering our climate action plan.”
Commenting on the launch, James Sparshott, Head of Local Authorities Distribution, Legal & General Investment Management (LGIM), said:
“We are delighted that the London Borough of Newham Pension Fund has decided to make such a significant investment into our strategy. We recognise the urgency of addressing climate change and continue to experience demand for Environment Social and Governance (ESG) investment strategies.”
Newham Council declared a Climate Emergency in April 2019 and, following a year and a half of strategic planning and work, published a Climate Emergency Action plan in July 2020 to set out a path as the council strives to become carbon neutral by 2030 and carbon zero by 2050.
In June, the Council issued its annual Climate Emergency Report itemising its steps taken to tackle the climate crisis. The actions above are aligned with these steps.