Avon accelerates net zero target to 2045
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Avon Pension Fund has brought its net zero target forward to 2045 from 2050. The fund has also set intermediate targets to achieve a 43% reduction in carbon emissions by 2025 and 69% by 2030. Among others, it will divest from high emitters if they fail to be net zero aligned by 2030. This year, the fund will also explore nature-based investments.
The £5.4bn local government pension scheme for Bristol, Bath and surroundings said the change builds on work to make investments more climate-friendly, such as committing £400m to renewable infrastructure in 2020 and investing £2bn in climate-aligned sustainable equities during 2021-23.
The Local Government Pension Scheme fund added that it consulted more than 5,000 members of the scheme and engaged extensively with local stakeholders last year, as well as publishing its annual responsible investment report this week.
“Climate change poses the biggest risk to our planet. There is no Planet B, and we can all play our part in protecting Planet A,” said cllr Paul Crossley, who chairs the pension fund committee.
“There was broad agreement among stakeholders that the Avon Pension Fund should set more ambitious climate goals, and we are delighted to bring forward our net zero target to 2045, an ambitious but achievable date. We will keep this target under regular review and will seek to accelerate further as technology and government policy develop.”
Head of pensions Nick Dixon believes there is increasing convergence between financial returns and responsible investing.
“We want to seize this opportunity for the Fund to achieve its objectives in a sustainable way, contributing positively to the climate transition. Our new strategy delivers a step change in our approach, focused on meaningful real-world impacts,” Dixon said.
Measures agreed by the pension fund committee in December 2023 include requiring high emitting companies to be net zero aligned by 2030. Without this, the fund said it will divest from such companies. Progress will be independently monitored against criteria provided by external organisations such as Climate Action 100+.
The fund also wants to cover more fund assets with its climate targets, setting a new one to reduce the carbon intensity of its corporate bond portfolio by 60% by 2030 measured against a 2019 baseline. The committee has set an ambition to achieve 100% coverage, aligned with industry reporting meaningful climate metrics across all asset classes.
It plans to have 70% of financed emissions either aligned with net zero or covered by active engagement in 2024 and bring this up to 90% by 2027.
In addition to managing climate risk, the investment panel will this year explore how the fund can allocate to nature-based investments, for example timber, agriculture and funds targeting biodiversity which can be considered alongside climate solutions.
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