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London CIV to reassess some investments for climate-target compatibility

Pedestrians walk near the Bank of England in London


The carbon footprint of some of pension pool London CIV’s equity and corporate fixed-income investments is higher than the level required to maintain global temperature increases at below 2 degrees Celsius by 2025.


The London-based pool’s first climate risk analysis, covering £8.7 billion ($12 billion) in local authority member fund assets, showed that emissions were 11.5% higher in certain assets than what is needed to align the pool’s carbon footprint with the requirements of the Paris Agreement.


As a result, London CIV will release new targets following an extensive client consultation that will take place this year.


“We are currently in the process of assessing different methodologies for target setting and conducting internal feasibility analysis. Once we have arrived at a recommendation for a short- and medium-term target this will be shared with client funds and the client consultation period will begin,” a spokeswoman said.


However, the assessment, which covered infrastructure and sovereign debt investments as well as listed equity and fixed-income allocations, also showed that London CIV has a lower carbon footprint compared with its benchmark MSCI World index across all carbon intensity metrics. The investments have a lower exposure to both fossil fuels and coal than the index, stemming mainly from a lower exposure to the utilities sector compared with the benchmark. “As long-term investors, it was important that the analysis was not just a backward-looking carbon footprint, but an indication of our future risk in a range of different climate scenarios. We hope to use the findings of this analysis to drive action, not only within the London CIV but also amongst all of our client funds,” Jacqueline Jackson, head of responsible investment at London CIV, said in a news release.


London CIV managed £12.6 billion on behalf of London local authority funds as of March 31.


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