LGPS funds and pools flex shareholder muscle on climate investment

Two Local Government Pension Scheme (LGPS) pools and two funds have joined a group of investors calling on Barclays bank to cease fossil fuel investment.

Brunel Pension Partnership, LGPS Central, Falkirk Council Pension Fund and Merseyside Pension Fund are among 11 institutional investors which, alongside more than 100 individual shareholders, have signed a resolution to be considered at Barclays’ annual general meeting in May.

The resolution calls for the bank to set and disclose targets to phase out the provision of financial services to non-green energy companies and to report on progress each year.

Laura Chappell, chief executive of Brunel, said: “Brunel believes climate change poses significant risks to global financial stability and could thereby create climate-related financial risks to our own business operations, portfolios and client partner funds, unless action is taken to mitigate these risks.”

“We believe that it is crucial for investors to carry out climate change risk assessments across the whole financial chain.

“As banks are the biggest lenders, they are a key component of this.”
She said that the lending practices of many banks pose a serious threat to the goals of the 2015 Paris agreement on climate change.

Jeanne Martin, campaign manager at ShareAction, a campaign group which has coordinated the intervention, said: “The message is clear: piecemeal changes in energy policy will no longer cut it.

“For too long, minor policy improvements have provided cover for the banking sector, while failing to halt fossil fuel financing.

“We know what needs to happen. Banks must align their lending with the science.

“If Barclays supports the Paris Agreement, it will support this resolution.”

The resolution also encourages the bank to consider the “just transition” away from fossil fuel investment, to protect the workforce currently employed in the sector.

In December, speaking at the annual conference of the Local Authority Pension Fund Forum (LAPFF) in Bournemouth, Nick Robins, a professor in sustainable finance at the London School of Economics’ Grantham Research Institute on Climate Change, said: “If we are going to accelerate climate action it needs to have a very clear social dimension.

“When we’ve been thinking about climate, as investors, for the last ten or fifteen years, the ’S’ of ESG has often been rather silent.”

In November, delegates at Room 151’s LGPS Asset Allocation Forum heard James Bevan, chief investment officer at investment manager CCLA: say:

“We are now at yet another policy watershed and we are about to see a real shift in legislation, regulation and policy action that will put climate at the centre of everything that goes on.”

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