More than £600 million of a Gwent pension fund is to be invested into a low-carbon scheme.
The Greater Gwent Pension Fund’s “passive investments”, totalling £660 million and equating to 22% of the total fund, will be transferred into a low-carbon tracker fund, operated by Blackrock.
Torfaen council’s pensions committee approved the investment at a meeting on Monday.
The pension fund – which manages pensions for Torfaen, Newport, Monmouthshire, Blaenau Gwent and Caerphilly – is looking to reduce its carbon footprint after it was revealed by Friends of the Earth that it invested £245 milllion into fossil fuel companies in 2016/17.
While investments in fossil fuel companies have now fallen to £208 million, the fund has also been searching the market for “suitable investment opportunities” to further reduce its carbon footprint.
The transfer of funds into Blackrock’s low carbon scheme will reduce carbon emissions by 80 per cent compared to the current fund.
Graeme Russell, head of pensions, said the move represented “a very substantial switch”.
Mr Russell said the transfer “would not have any adverse impact on performance”, with the low carbon fund expected to offer a similar return to the current fund where investments are held.
The £660 million investment includes £420 million held in UK equities and £240 million in US equities.
The reduced carbon footprint is achieved by a reduction in exposure to
the major oil companies.
Aoifinn Devitt, an adviser to the pensions committee, said the investment was a “very strong, assertive move”.
A Torfaen council report says the switch “represents a very significant step in reducing the carbon emissions of the fund”.
It adds: “It is clear however that this is just one step and the journey towards government targets will continue on an ongoing basis.”
The report says the pensions committee will also continue to exert “additional pressure” on the Wales Pension Partnership, to ensure its investments also support a reduction in the fund’s carbon footprint.