Railpen, the UK’s rail workers’ pension fund with £34bn (€40.5bn) in assets, has pledged to focus on real-world impact in its updated net-zero plan by drawing a line between ‘paper decarbonisation’ and financing that can accelerate the transition.
Railpen’s 2025 net zero plan emphasises how the fund can drive systemic change in the wider economy and reaffirms its commitment to becoming a net zero fund by 2050 or sooner.
In the report, Railpen stresses the importance of investing in climate solutions, such as renewable energy, low-carbon infrastructure, and climate-resilient real estate, while engaging with companies to reallocate funds towards transition-aligned activities.
Railpen argues that this approach ensures that members’ pensions are not only protected from systemic climate risks but also actively contribute to the infrastructure, energy and adaptation projects needed to meet global net zero goals.
The plan focuses on four main themes: effective climate risk management, strong stewardship of assets, targeted capital allocation to climate solutions, and active policy engagement.
Railpen said the cornerstone of the plan is engaging businesses in ‘material’ sectors to align with net zero by 2050 or sooner. Following the creation of asset class alignment plans for listed equities, corporate fixed income, and sovereign bond portfolios, 23% of assets are currently aligned to net zero, with the target of 100% in material sectors expected to be hit by 2040, the plan stated.
Moreover, portfolio emissions were 41% lower in 2024, surpassing Railpen’s goal to deliver a 25–30% reduction by 2025 and putting Railpen on course for a 50% reduction by 2030.
Taking action
Looking ahead, Railpen has committed to embedding climate risk insights into investment decisions, proactive and collaborative policy advocacy, alongside scrutinising the climate policy advocacy of investee companies. It has also committed to engaging priority assets to accelerate net-zero alignment and constructing portfolios that support transition and resilience.
In addition to this, the fund said it will use stewardship as a primary tool for sustainable finance. As such, Railpen will engage companies responsible for the vast majority of its financed emissions, aiming for 70% coverage today, rising to 90% by 2030, using its shareholder voice to demand credible transition strategies.
Railpen’s plan came as the London Pensions Fund Authority (LPFA) published its own 2023–2024 responsible investment report, which announced a change in its stewardship approach, with a stronger focus on transparency, member engagement, and climate accountability.
Other developments included publishing new responsible investment and climate change policies, launching a net zero hub and first net zero progress report, and strengthening oversight of climate-related voting.
Last week, LPFA also announced that 80% of its £8bn (€9.1bn) total assets, or approximately £6.4bn, is now invested with climate risks in mind, as part of its commitment to becoming a net zero pension fund by 2050 or sooner.
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