Sustainable City-Building ‘London Fund’ Emerges After Brexit Dust Settles

Three London-centric pension organizations pooled their capital to back the formation and strategy of “The London Fund,” a new investment vehicle focused on improving the quality of life for London communities.

Local Pensions Partnership (LPP), London Collective Investment Vehicle (LCIV), and the London Pensions Fund Authority (LFPA), whom together have a combined assets under management valuation of nearly £57 billion ($74.3 billion), said the potential pipeline of investments would include residential property and affordable housing, community regeneration projects and infrastructure, and clean energy.

“Each of these assets will be selected to provide sustainable, long-term, and risk-adjusted value to the pension scheme members, while creating a ‘double bottom line’ by making a positive contribution to social and environmental issues in the area,” the Local Pensions Partnership said in a statement.

The primary motive behind the funds’ collaboration on the London Fund is the expectation for an increased amount of investment opportunities as a result of the fund’s relatively large scale, rather than if the pension organizations had been working alone. The pensions said they expect to target an allocation of several hundred million pounds, across a spectrum whose scope was widened as the pension funds merged their resources.

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London’s population is expected to surge at a rate faster than any other UK city, subsequently placing pressure on the development of residential housing and infrastructure. “The London Fund is being specially created and designed to address these challenges in a long-term sustainable way,” the LPP said.

London Mayor Sadiq Khan recently released a report and toolkit with New York City Mayor Bill DeBlasio to help guide other municipalities encourage public opinion against fossil fuel divestments, and a framework on how to divest from high carbon-emitting companies.

A study by Willis Towers Watson’s Thinking Ahead Institute argued for sustainable-friendly behaviors from large scale institutions like those backing The London Fund. The institute claims large asset owners have an inherent moral and social responsibility to push forward with sustainable-friendly investment strategies.

The United Kingdom finalized its departure from the European Union on January 31. . “We are delighted to be able to develop a project that will provide attractive returns for our members while helping us support communities in London,” said a spokesman for The London Fund.

NY to Investigate Coal Investments to See If Green Efforts Are Improving

Tags: affordable housing, ESG, Local Pensions Partnership, London, London Collective Investment Vehicle, London Pensions Fund Authority, sustainable investing, The London Fund

The New York State Common Retirement Fund (CRF) announced it will launch a thorough review of its coal investments to ensure they’re realigning their business models to be more sustainable and supporting the development of tomorrow’s low-carbon economy.

“We are assessing minimum standard for transition readiness at coal mining companies first, because they face the greatest risk as the world turns to cleaner and renewable energies,” New York State Comptroller Thomas P. DiNapoli said in a statement. Any laggards would face risk of divestment from the fund.

The announcement is a step in the CRF’s overall plan to decarbonize its portfolio, after a six-member advisory group warned the fund last year to have 100% sustainable investments by 2030.

The fund has been taking major steps lately to fully realize these low-carbon aspirations. After DiNapoli announced intentions to spearhead a doubling of the pension plan’s environmental, social, and governance (ESG) funding to $20 billion, the pension appointed its first ESG director to help advance the green agenda.

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The CRF sent a survey due in mid-February asking the coal companies in question to align their business models with standards set by the Paris Agreement. Among the concerns being evaluated are a reduction in capital expenditures on coal, setting long-term targets to reduce greenhouse gas emissions, improving climate reporting, and increasing revenue from low-carbon or green technologies.

“This is an important step in the right direction as this new standard will help New York State Common Retirement Fund reduce its climate-related risks associated with fossil fuel companies and implement its climate action plan,” said Ceres CEO and President Mindy Lubber. “It will also ensure that the Fund invests in transition-ready companies, and not in companies whose future is tied to thermal coal mining, which has a dim future in light of the accelerating transition to a sustainable, net-zero emissions economy.”

CRF is a member of the Ceres Investor Network on Climate Risk and Sustainability.

The fossil fuel divestment movement has been gaining traction, as many UK public universities committed to doing the same, as well as a UK pension scheme earlier this week.