Avon Pension Fund
The Avon Pension Fund administers the Local Government Pension Scheme (LGPS) for over 418 employers and over 111,000 members in the former Avon area.
Employers include local unitary councils, universities, academies, town and parish councils, housing associations and charities.
Portfolio level
Portfolio level – Portfolio decarbonisation reference target
Baseline date: 31 December 2019
Baseline performance: Listed equity: 139,256 tCO2e (scope 1 and 2)
Target year: 2025, 2030, 2050
Target: Whole fund: Net Zero by 2050 Listed equity: absolute emissions reductions of 43% by 2025 & 69% by 2030
GHG scopes included:
Targets are in reference to Scope 1 & 2 emissions. This will be extended to cover Scope 3 as and when data coverage is sufficiently robust and avoids double counting, patchy coverage etc.
However, the Fund does also measure its carbon footprint in relation to Scope 1, 2 & Tier 1 scope 3 emissions (recognising that this analysis provides useful insight into the decisionmaking process).
The Fund has been a part of engagement work undertaken by strategic partners (principally Brunel) in relation to financed fossil fuels over the past year in recognition of the materiality of scope 3 emissions.
Asset classes in scope:
As above.
Due to the availability of data and size of equity allocation as part of whole portfolio the priority has been given to listed equities with a view to extending this analysis to fixed income and real assets as and when data coverage allows.
Net zero scenarios/methodology: IPCC scenario decarbonisation curve consistent with a 1.5C scenario.
Portfolio level – Investment in climate solutions target
Baseline date: N/A
Baseline performance: N/A
Target year: 2025
Target:
Invest at least 30% of the total assets in sustainable and transition aligned investments, including 5% of assets being invested in renewable energy infrastructure.
Additional information:
Once able, we will also be setting further dedicated climate solutions targets across different asset classes.
Asset level
Asset level – Portfolio coverage target
Baseline performance:
£600m in Paris Aligned Benchmark Fund (as at Dec-2021), invested since October 2021. Representing 10% of total assets and 23% of listed equity portfolio.
Target year: N/A
Target: N/A
Asset classes in scope: N/A
Data sources/methodology:
The Fund is committed to annually assessing its listed equity portfolio based on a forward-looking framework which categorises holdings from a bottom-up perspective based on emissions intensity and transition risk.
Additional information:
The Fund has been undertaking transition alignment analysis of our listed equity portfolio. This will then be used to set future quantitative targets. Future analysis to extend to other asset classes.
Asset level – Engagement threshold target
Approach:
The collective engagement baseline across the whole Brunel Pension Partnership is 47.3% of financed emissions. Over the year we will agree with the Brunel Pension Partnership on future engagement priorities and thresholds for action.
Additional information
Methodology:
We are targeting alignment by 2050 and have already made good progress towards this goal, with interim equity emissions targets to ensure we remain on track.
2020 alone saw a 22% year-on-year reduction in carbon intensity of our listed equity portfolio, which is now 30% less carbon intensive than the benchmark.
We have almost £600m invested in dedicated Paris Aligned equity fund plus a further £380m already committed to renewable energy infrastructure.
Further work:
We also plan to set-out further targets across other asset classes that build on the allocation decisions we have already made.
Operational emissions:
Bath & North East Somerset Council, who administer the Fund, have declared a climate emergency and are working towards their own Net Zero goal by 2030. A desire to reduce emissions is reflected in staff policy, from hybrid working arrangements to encouraging public transport use and providing bike storage.
Separately the pension fund has an ongoing digitalisation programme to improve IT infrastructure, reduce the use of printed/posted material and increase electronic communication with members and employers.
For further information:
Avon Pension Fund Responsible Investment Annual Report 2021
Avon Pension Fund case studies