The £8bn London Pensions Fund Authority has pledged to allocate an initial 5% of its assets to climate solutions.

The roughly £400m commitment forms the end to LPFA’s net zero objective. The Local Government Pension Scheme fund has existing climate solution holdings of about £150m within Local Pension Partnership Investments’ equity and corporate fixed income.

It also includes £250m announced in April 2025, when LPFA adjusted its strategic asset allocation, making an allocation to environmental opportunities.

The term ‘climate solutions covers a range of investment opportunities, LPFA noted, including energy efficiency and renewable energy, sustainable industry, transport, reforestation and wetland restoration projects.

“Net zero is a strategic priority for us and investing in climate solutions is a vital part of that strategy. It’s about ensuring that we invest in opportunities that help us pay members their pensions when they retire,” said the fund’s new chief executive, former Scheme Advisory Board secretary Jo Donnelly.

“We are pleased to be able to commit to a goal combining existing investments and a specific allocation to environmental opportunities. Fund investments do evolve, of course, but we are clear about the opportunities that exist in a low carbon future,” she added.

The fund’s responsible investment manager Paul Hewitt explained that for the 5% initial goal, the fund used current Institutional Investor Group on Climate Change guidance to identify existing listed equity and corporate fixed income assets that can be described as climate solutions and built on this.

Referring to new IIGCC supplementary guidance on climate solutions published on 11 June, he said: "It’s worth pointing out that, until last week, there's been no definitive guidance on how to approach classifying Infrastructure or Real Estate assets as climate solutions. This means, that our actual investments in this area are likely to be much higher.”

For example, the fund is invested in one of Europe’s largest windfarms through GLIL Infrastructure, a collaboration between Greater Manchester Pension Fund, LPFA, Lancashire Coun­ty Pen­sion Fund, Mersey­side Pen­sion Fund and West York­shire Pen­sion Fund.

“While 5% is a great start, we’ll be revising our targets as we get to grips with the new guidance and as the climate solutions market evolves,” Hewitt added.

The LPFA signed up to the IIGCC’s Net Zero Investment Framework in 2021, meaning it is required to set a climate solutions target. In 2022, the fund decided to exclude fossil fuel equities, and last year, it revised its responsible investment policy, including natural capital and the just transition.