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£2.7bn council pension fund aims to cut its carbon footprint to zero

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Swansea Council’s award-winning pension fund has cut its carbon footprint by almost 60% and aims to go all the way to net carbon zero in the coming years.

The £2.7bn fund looks after the retirement funds of 47,000 members has already taken major steps to going net carbon zero by cutting the amount of cash invested in oil companies and other organisations with similarly-high carbon footprints.

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And its main committee this week agreed that the fund would go net carbon zero by 2037, 13 years ahead of the UK as a whole.

Since 2017, the pension fund has managed to cut its carbon footprint by 58% thanks to a mix of disinvestment in carbon-rich businesses and investment in green and environment-friendly initiatives.

Now it has set out a plan to materially increase the proportion of investments that have a positive focus on the climate.

Currently just 7% of the fund’s investments has direct ties to fossil fuels and that will be cut to nil before 2037.

Clive Lloyd, chair of the Swansea Pension Fund committee, said: “The fund is delivering for its 47,000 members, it is delivering for the future of the planet.

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“We were the first local government pension scheme in Wales – and among only a small number in the world – to commission a review of our equity investment portfolio to find out the exact extent of our carbon and fossil fuel related investments.

“Since then we have moved £0.5bn of assets into low carbon index tracking funds which has reduced further what was already a low level of investments in carbon-related industries.” 

The Swansea fund – which Swansea Council manages for Swansea, Neath Port Talbot as well as a number of other employers in the area – has already been recognised at the LAPF Investments Awards, which celebrate outstanding achievement by pension funds and service providers.

Swansea won the award for the fund with the Best Approach to Sustainable Investment in the UK in 2019. It’s also been nominated for Local Authority Pension Fund of The Year Best Climate Change Investment Strategy and Best Investment Innovation in this year’s awards, thanks to an equity protection programme that saved the fund £9m when the global equity market fell by -20% earlier this year due to the Covid-19 outbreak and also its carbon reduction total return swap programme which further reduced the portfolio’s carbon exposure.

Cllr Lloyd added: “In 2019 we passed a motion in Swansea declaring a Climate Emergency and we urged the UK government to do the same.

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“We are making decisions and taking practical steps every day that are making a real difference but we know we can and we will do more. We are determined to make Swansea the most green and energy efficient council in Wales.”

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