Border to Coast increases allocation to climate solutions
The pool’s latest climate change report shows £8bn is invested in equity and fixed income portfolios, an additional £2.5bn deployed in private markets.
Border to Coast Pensions Partnership, a pension pool for local government pension schemes in the UK, has reported an increase in its allocation to climate solutions. In total, the LGPS pool has now invested £8bn in climate solutions through equity and fixed income portfolios - according to its latest climate change report.
Border to Coast’s private markets portfolio also includes a significant climate solutions allocation – an additional £2.5bn has been committed of which £990m has been invested. In 2023, committed capital for climate solutions in this portfolio was £1.4bn.
A key vehicle for these investments is the climate opportunities portfolio. In April 2024, the pool had raised £1.2bn for the offering’s second series. Thus far, partner funds have committed a total of £2.6bn to the strategy.
The climate opportunities fund, which draws on the benefits of pooling, has targeted investments in a range of climate solutions that the pool says will have a “material positive impact in supporting the energy transition”.
“The collective scale offered by pooling enables the development of innovative solutions that not only expand partner fund access to the investment opportunities involved in decarbonisation – through the likes of the innovative £2.6bn climate opportunities strategy – but also provide the capital needed to fund the energy transition and support global net zero goals”, said Mark Lyon, Border to Coast’s deputy chief investment officer.
Border to Coast’s focus on climate solutions also extends into hard-to-abate sectors such as steel. For instance, through its climate opportunities strategy, the LGPS pool has invested in H2 Green Steel - a Swedish company building the world’s first large-scale green steel plant.
The pool’s increasing appetite for climate solutions is set within the wider context of an updated responsible investment policy and a strengthened exclusions policy. The latter was updated in January 2024 when the revenue threshold for thermal coal and oil sands was reduced from 70% to 25%.
“We invest for the long-term, and this makes managing the risks posed by climate change paramount. The transition to a net zero economy will require wholescale changes to how the economy and society functions, and it will require significant capital investment”, added Lyon.
The pool has reported a reduction in financed emissions of 58% compared to 2019 levels – ahead of a 53% reduction target by 2025 set forth in its Net Zero Roadmap. The pool’s net zero strategy - which targets net zero emissions by 2050 – now covers 70% of assets under management.
