Northern Ireland LGPS commits to low-carbon fund

During the first quarter of 2022, the public body responsible for managing the Local Government Pension Scheme in Northern Ireland moved its passive equities portfolio, which was also managed by LGIM, to a low-carbon transition fund that tracks the Solactive L&G Low Carbon Transition Developed Market index.

According to a statement, the low-carbon fund's strategy is to reduce exposure to carbon emissions over time. The index initially reduces carbon intensity by 70 per cent relative to the standard global index, and aims to reach the goal of achieving net zero carbon emissions by 2050.

Each holding is assigned a climate score based on three main indicators: emissions intensity, reserves intensity and green revenues. Using the overall climate scores, an adaptive tilt away from climate laggards and towards climate leaders is applied to capital allocation within the index, the NILGOSC said.

David Murphy, chief executive and secretary of NILGOSC, noted the organisation “has been taking action to mitigate climate risk since 2008”.

“All of our active fund managers are required to take climate change into account when making investment decisions — however, up to now, our passive equity funds have tracked standard indices.” 

He added: “The transfer has been made from those indices to the Low Carbon Transition Fund so that climate risk can be incorporated.

“This move is an important part of our strategy to mitigate the risk of carbon in our portfolio and adds to a suite of other actions we have been taking to accelerate moves to a low-carbon economy, both within our portfolio and the real world economy.”

Separately, NILGOSC is continuing to build up its infrastructure portfolio to a target of 7.5 per cent and currently holds assets that are an important part of the emerging low-carbon economy, it noted.

These assets are spread globally and include wind, solar, energy-from-waste and hydro power generators, public transport systems, district heating and manufacturers for the renewable energy industry.

This article originally appeared on MandateWire.com