LGPS Central, the £43bn pool for eight local government pension funds in the Midlands, has announced a partnership with carbon reduction firm C2Zero in a bid to reduce its operational emissions.
The pool, which aims to become carbon neutral by 2050, will purchase ETS Emission Allowances through C2Zero’s Carbon Cancellation Service. The volume of the transaction has not been disclosed.
C2Zero launched in Australia in 2021 and opened its UK Carbon Cancellation Service (C4S) in London in March 2024 as part of the Connect to Prosper initiative led by the former Lord Mayor of London, Alderman Professor Michael Mainelli.
C4S is a platform that enables businesses and individuals to purchase Carbon Cancellation Certificates linked to UK Emissions Allowances. The UK’s emissions trading system sets a limit on the amount of carbon that can be emitted, with firms able to purchase allowances within this cap. They must then surrender allowances in proportion to their emissions.
By capping the total amount of emissions that can be produced, the UK’s Emissions Trading Scheme aims to create a carbon price that will ultimately drive further decarbonisation.
One allowance, which equates to one tonne of CO2, currently trades at between £30 and £40. The price of ETS has fallen over the last year due to a combination of weaker demand and a surplus of carbon allowances in the market, though prices are expected to be less volatile than those in the voluntary carbon market.
Patrick O’Hara, head of responsible investment and stewardship at LGPS Central, said: “C2Zero’s solution provides access to carbon emissions allowances from the UK Emissions Trading Scheme. In addition to access, the ability to remove the purchased allowances from circulation was also attractive. Partnering with C2Zero has provided us with a solution that meets these aims and is both measurable and transparent.”
The initiative received the backing of academic Andreas Hoepner, professor of operational risk, banking and finance at University College Dublin and head of the Data Science Hub, as well as a member of the EU Platform (PSF) on Sustainable Finance. “I am encouraged by the innovative and robust approach taken by LGPS Central in addressing its operational emissions. It is important for asset owners and asset managers to address their own operational emissions, and I hope other enterprises follow this example.”
