The London Pension Fund Authority (LPFA) will not actively divest
from fossil fuels despite pressure from the government of the UK capital.
A report from the London Assembly last month urged the LPFA to
“managed divestment” from fossil fuels in an effort to reduce the city’s
“We do not expect fund managers to specifically invest or divest in certain sectors, but they are expected to take a responsible investment approach instead.”However, in a letter to members, the £4 billion ($6.2 billion)
pension said its existing environmental, social, and governance (ESG) and
responsible investment policies were sufficient to “result in long-term
“Consequently, we do not expect fund managers to specifically
invest or divest in certain sectors, but they are expected to take a
responsible investment approach instead,” the newsletter stated.
The LPFA has less than 1% invested in fossil fuels, the letter
“It is important to note that, over time, this figure will
change as we invest and divest,” it added. “However, our key aim must be to
ensure we can continue to pay your pensions as they fall due.”
The pension also explained that its responsible investment stewardship
group, led by CIO Chris Rule, regularly reviewed and reported on voting
policies and communications with fund managers over ESG issues.
“As a pension fund we have a fiduciary duty to make
investments where we see the best return for our employers and members,” the
The LPFA’s stance reflects that of California’s two leading
public pensions, which last year were told
to divest from coal producing companies by Senator Kevin de León. The California
Public Employees’ Retirement System said it preferred to engage with companies
rather than sell indiscriminately, while the California State Teachers’
Retirement System has been increasing its investments in clean technology.
Capitalists’ Guide to ESG & London
Pension Urged to Divest from Fossil Fuels