Fund breaks new ground

A £2.6BN public sector pension fund will channel more of its wealth into green investments and reach a “net zero” position by 2037.

Councillors who oversee the City and County of Swansea Pension Fund made the decision following advice from officers and finance experts.

Cllr Clive Lloyd, pension fund committee chairman, said the move was “groundbreaking”.

The fund has already reduced its carbon investments in shares by 58%, but a report said its remaining investments and holdings still implied a temperature rise of around 3.50C.

The fund’s managers will now seek to reduce that implied temperature rise to 1.50C by 2030 with a series of measures.

These include putting more money into investments which supported a transition to a green economy, and reducing the proportion of its fossil fuel portfolio from the current 9% to zero.

There will also be more engagement with companies the fund invests in, and increased monitoring of the fund to check how the measures were working.

A commitment to funding treeplanting projects and sustainable agriculture is also being explored.

A representative from the pension fund’s advisers, Hymans Robertson, told the committee that the net zero strategy would put the fund “at the forefront of what pension schemes and other people are doing in general”.

He said the targets were achievable but that there would become a point where a “trade-off” between investment returns and the low-carbon investment approach would be required.

Cllr Lloyd said the committee didn’t have a big appetite towards risking the overarching fiduciary duty to the fund’s thousands of members.