The Wales Pension Partnership (WPP) – the pool for Welsh Local Government Pension Scheme (LGPS) funds – has set up a new decarbonisation initiative across its £2.5bn (€2.88bn) global equity assets managed by Russell Investments.
The pool is targeting a reduction in both the carbon footprint and fossil fuel reserves exposure of its global equity investments by 25%, relative to its MSCI All Country World Index benchmark, it announced.
To meet its decarbonisation targets, WPP will use the Russell Investments’ Enhanced Portfolio Implementation (EPI) infrastructure tool through Link Fund Solutions, the pool said.
EPI leverages a centralised trading and portfolio management process with Russell Investments responsible for executing the investment strategies of WPP’s underlying fund managers, it added.
By using the framework, the WPP said it would be able to benefit from greater control and customisation around decarbonisation and other ESG-related objectives.
Glyn Caron, WPP joint governance committee chair, said: “Climate change not only poses significant challenges for society; it also represents a financial risk for our constituent authorities and scheme members.”
Caron added that “by reducing the carbon exposure within our active equity assets, in partnership with Russell Investments, we are seeking to address these challenges. We see this as a positive first step in meeting our long-term sustainability goals”.
Jim Leggate, Russell Investments managing director, UK institutional and Middle East, said that issues around climate change and the transition to a low carbon economy “are increasingly critical issues that institutional asset owners are seeking to address”.