Avon Pension Fund Ploughs £700m into Paris-Aligned Equity Investment Strategy

Last Updated on: 22nd November 2023, 06:40 pm

Avon Pension Fund has moved a significant step closer to achieving its net zero goals after investing over £700 million in a Paris-aligned funding solution.

The Local Government Pension Scheme for the West of England covers employers in Bristol, Bath & North East Somerset, North Somerset and South Gloucestershire and has over 130,000 members. The Paris Agreement on limiting global warming forms the basis for Avon’s climate change investment objectives.

Avon now holds over £1 billion in dedicated Paris-aligned index equity strategies and has moved away from using standard market-cap indices. The new investment product, structured as a total return swap referencing Paris-aligned indices, will release liquidity to support other areas of the investments portfolio while expressly supporting the low carbon transition.

Nathan Rollinson, Investment Manager at Avon Pension Fund, said: “This new investment will help us as we work towards our net zero goals. We’re on track to lower the carbon emissions of our equity portfolio by 2/3rd by 2030, compared with 2019.”

Alex Orr, Head of LGPS at BlackRock, added: “We’re pleased to have worked with Avon Pension Fund in developing innovative investment solutions to progress on their net zero agenda. Their commitment to developing unique structures and improve their net zero positioning is testament to their thought leadership and commitment to partnership.”

This marks a continuation of work by Avon Pension Fund to integrate climate considerations into its risk management framework, following the innovative environmentally-aware cash fund and Paris-aligned Exchange Traded Funds adopted last year.

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