London CIV has launched a lower carbon variant of its existing global alpha growth fund, with £485m (€562m) seed investment from two of its local authority client pension funds, which it did not name.
The active equity fund will be managed by Baillie Gifford.
London CIV, the pooling vehicle for the capital’s 32 public pension funds, said the sub-fund provided its clients with the opportunity to align with the objectives of the Paris Agreement.
It said the fund would be subject to a quantitative screening to remove companies with particular levels of revenue exposure to fossil fuels, including revenue from exploration, production, and service provision to the sector, and would apply a qualitative screening to other companies “to explore the balance between vital and discretionary emissions, potential emission reduction pathways, and management’s appetite to adopt a low carbon transition”.
Jason Fletcher, CIO at the London CIV, said: “As investors, we play an important role in navigating a pathway to net-zero emissions through alternative investment approaches, and we must hold companies to a higher standard of accountability and transparency.”
In April London CIV announced the launch of a renewable infrastructure fund with £435m of commitments from client funds such as Wandsworth pension fund.
It is also looking at fixed income and passive equity funds that will also “look to respond to the climate change challenge”.
The asset pooling vehicle has completed an inaugural climate risk analysis and is planning to set carbon portfolio emission reduction targets ahead of the UN climate change conference.
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