Council's pension fund sets ambitious new targets on responsible investments
Hackney Council’s pension fund has reduced its exposure to fossil fuel reserves by nearly 97% as part of its commitment, made six years ago, to cut its exposure to carbon-related assets.
The near-100% decarbonisation of investments - in areas such as coal reserves and oil companies - is a significant outperformance of its commitment to reduce exposure to carbon by 50% between 2016 and 2022 - the first council in the country to make such a pledge.
One of the ways the fund has done this is by moving away from UK investment mandates stocks - a traditionally carbon-intense economy reliant on oil, gas and mining investments - and instead investing more in global mandates, with a greener, more sustainable view.
Now the fund has expanded its responsible investment strategy to review further decarbonisation of its investments, following a meeting of the Council’s Pension Committee last night.
Its new ambition is to become carbon neutral by 2040 and to align with global ambitions to limit worldwide warming.
This means the fund will look to place new investments into mandates where companies and businesses have a green agenda and can demonstrate plans or commitments to decarbonise, such as reduction of emissions.
The new strategy aims to harness the power of the fund’s collaborative investment clout to drive cleaner behaviours in companies and incentivise them to work greener.
Three key principles will be applied when considering future investment in companies: climate action; clean energy systems; and human rights.
We’re really proud that we no longer rely on investment in carbon-related companies.
We’re already committed to some of the most robust and ambitious action of any Council in the country to tackle the climate emergency. But to make a real change in the world we must use our collective investment power to drive and incentivise big companies to make greener changes to their working models.
This review of our pension fund’s responsible investment policies sets out how we can go further to reduce exposure to fossil fuel risk, bringing it in line with the international 1.5C target to limit global warming, as a further step on our path to a fossil fuel free future. We will do this while protecting the pensions of Council employees, including key workers like social care workers, waste operatives and parks staff.
The Committee also heard that the fund would be looking to remove assets from Russian-linked stocks.
Cllr Chapman said: “The invasion of Ukraine has horrified us all; we stand united with the people of Ukraine. At this time of extraordinary crisis and global action, we have taken the unprecedented step of looking to divest from stocks in Russia - of which we have a small exposure of approximately 0.05% via pooled investment vehicles.
"Not only is this a show of solidarity with the Ukrainian nation but is also to ensure our money - no matter how small - cannot not be used anywhere that may benefit the Russian regime. We will work with our fund managers to divest from the holdings as soon as is practicable.”
To find out more, read the Pension Committee's report here.