Lewisham Council’s Pension Fund moves away from fossil fuels

The Council’s Pension Investment Committee (PIC) has committed 50 per cent of its Fund to lowering the carbon footprint of its investments.

The strategy means focusing more on low carbon low cost investments.

Low cost, low carbon funds are structured to invest in companies which avoid over exposure to the production or consumption of fossil fuels - for example, choosing companies providing energy options which address the twin concerns of fuel poverty and climate emergency. 

Cllr James Royston, Chair of the Pensions Investment Committee, Lewisham Council, said:
“The first duty of our Committee is to protect and grow the pensions of the Fund’s members who are Council employees and former Council employees.  Moving away from investment in high carbon equities makes sense in tackling the climate emergency and also makes sound economic sense. As well as the huge environmental impact of fossil fuels, supplies of oil and gas are finite and disappearing and are no longer good long-term investments.

“This week’s COP26 summit shows the importance of us all examining how we operate and what we can do to address the climate emergency – this is a big step by Lewisham Council to do just that.”

Lewisham’s Climate Emergency Action Plan, approved by the Mayor and Cabinet in 2020, includes a range of radical actions across the Council’s corporate estate, housing, transport and green spaces, with the ambitious aim of Lewisham being carbon neutral by 2030.

While management of the Pension Fund is separate, the PIC’s investment strategy aligns with and supports the Council’s ambition.

The Lewisham Pension Fund was valued at £1.6 billion as at June 2021.

Background information

In 2020, the PIC amended its strategic investment principles and agreed to move the majority of the current passive equity holdings, around 50% of its assets, to strategies focused low carbon low cost investments.

As part of its strategy the Council’s PIC has played a leading role, working alongside a number of London boroughs, in creating the Seed Investor Groups (SIGs) with the London Collective Investment Vehicle (LCIV), the London region local government pension scheme pooling vehicle.

The low carbon low cost SIGs are led by the LCIV and have been instrumental in supporting the launch of its low carbon low cost equities fund, in September this year.

Lewisham’s PIC is investing in the LCIV Fund and another low carbon low cost equities fund to be managed by Storebrand.

The transfer of assets into both investments is expected to be completed by the end of the year.