Camden’s Pension Committee works to address environmental concerns

Camden Council’s Pension Committee takes more climate action on the Camden pension fund.

The Committee took two significant decisions at its last meeting:

  • To make an investment into a Sustainable fund manager mandate that will reduces the fund’s carbon emissions within its equity investments by an estimated 87%.
  • To become the first London Borough Pension Scheme to commit to introduce Task Force on Climate-related Financial Disclosures (TCFD) from 2021 to both improve our transparency and accelerate adoption from our Fund Managers.

The new investment in the Sustainable fund mandate will see increased focus on the Environmental, Social and Governance (ESG) performance of companies across the world with the fund investing in the highest rated companies.

This decision will significantly reduce the pension fund’s carbon footprint across its equity investments, with an estimated 87% reduction in carbon emissions, whilst also addressing other investment concerns linked to ESG criteria, and supports the declaration of a Climate Emergency by Camden last year.

The investment maintains and supports the Camden Pension Committee’s strong standards of financial stewardship, engaging with and influencing companies with the aim of encouraging strong governance and sustainable strategies, while divesting from those that fail to meet minimum standards.

The pension fund will now look to transition funds into the new investment mandate over a period of six months.

Significant progress has already been made in Camden since the council declared a climate emergency in 2019. The proportion of the pension fund invested in fossil fuel equities has reduced from 12.8% in 2010 to 2.8%, with further reduction to follow from investing in the Sustainable fund. Carbon dioxide emissions are now 39% below 2010 levels as it transitions towards being a zero carbon borough by 2030, and its new Climate Action Plan sets a clear framework towards that goal.

Councillor Rishi Madlani, Chair of Camden Council’s Pensions Committee said:

“In 2019 we declared a Climate Emergency in Camden, which renewed our focus on tackling Climate Change.

“The Pensions Committee has taken a number of steps to better understand both our climate change risk, making climate change a standalone risk on our risk register in 2017; and climate opportunities, including committing a minimum 25% investment (£26m) in renewable projects within our infrastructure mandate.

“To further improve our approach to Responsible Investment we incorporated the United Nations Sustainable Development Goals, including ‘Climate action’ into our Investor Belief Statement.

“We believe that a strong responsible investment approach will add value over the long term and be mutually beneficial to our members and wider society and we now ensure that our investment managers and advisors prioritise these considerations when making investment decisions on behalf of the Fund.”

To better achieve these goals, the pension fund have agreed to re-invest existing funds in the LGIM Future World Cap Ex fund which will reduce the fund’s carbon footprint on those investments by an estimated 87%.

Councillor Madlani continued:

“Camden’s fund is an active member of the Local Authority Pension Fund Forum (LAPFF). This enables us to join with similar minded funds to collectively lobby companies on issues including climate change, gender inequality and many other issues.

“The Forum’s 82 members currently have combined assets of around £300 billion, giving it significant influence and making it an effective lobbying force. The membership of the LAPFF is one of the key ways that the fund engages on climate change issues alongside direct engagement with our fund managers, so that our investments can be better focussed in supporting the transition to a net zero carbon world.”

The Council has also recently adopted a series of amendments to the Council’s constitution, which will ensure that all Council decisions seek to enhance the natural environment, and to act to mitigate and adapt to climate change.

Camden council is the first local authority to enact constitutional changes in response to the Climate emergency. The council has also established a new Citizen panel, which will meet four times a year, to oversee the delivery of its new Climate Action Plan.