The London Pensions Fund Authority (LPFA) has committed to an initial goal of investing a total of 5% of its £8bn (€9.4bn) total assets — or approximately £400m — in climate solutions.
The £400m represented by the goal is based on an existing holding of £150m in existing climate solutions assets that the LPFA has within Local Pensions Partnership Investments’ (LPPI) equity and corporate fixed income holdings, and includes an additional £250m announced in April 2025, which saw the LPFA adjust its strategic asset allocation and make a specific allocation to its Environmental Opportunities fund to arrive at the 5% goal.
The administering authority and Local Government Pension Scheme (LGPS) fund with more than 100,000 members had also announced back then that it would soon announce the climate solutions target.
Guidance from the Institutional Investor Group on Climate Change (IIGCC) has historically defined climate solutions as including “activities, goods or services that contribute substantially to or enable emissions reductions to support decarbonisation in line with credible 1.5˚C pathways towards net zero”. The term includes a diverse range of investment opportunities such as energy efficiency and renewable energy, sustainable industry and transport to reforestation and wetland restoration projects.
LPFA said that the economic benefit of net zero was recently highlighted in a report by the UK’s Confederation of British Industry, in which it shows that between 2023 and 2024, the net zero economy sector grew 10.1% and now generates £83.1bn in Gross Value Added (GVA), with £28.8bn directly from net zero businesses and £54.3bn from supply chain activities and broader economic contributions.
Jo Donnelly, LPFA’s chief executive officer, said: “Net zero is a strategic priority for us and investing in climate solutions is a vital part of that strategy. It’s about ensuring that we invest in opportunities that help us pay members their pensions when they retire.
“We are pleased to be able to commit to a goal combining existing investments and a specific allocation to Environmental Opportunities. Fund investments do evolve, of course, but we are clear about the opportunities that exist in a low carbon future.”
Paul Hewitt, LPFA’s responsible investment manager, added: “To set this initial goal, we’ve used current IIGCC guidance to identify existing listed equity and corporate fixed income assets that can be described as climate solutions. We’ve then built on that to reach the full 5% goal.”
He said that it was worth pointing out that, currently, there is no guidance on what infrastructure or real estate can be classed as a climate solution.
“This means that our actual investments in this area are likely to be much higher. For example, through our investment in GLIL, we’re invested in projects like Hornsea 1, one of Europe’s largest wind farms. While 5% is a great start, we’ll be revising our targets as more guidance is issued and as the climate solutions market evolves,” Hewitt said.
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