London Pension Giant Commits £400 Million to Climate-Focused Investments by 2030

The London Pensions Fund Authority has set a new goal: to invest five percent of its total assets in climate-focused solutions. With the fund managing around £8 billion, that target translates to roughly £400 million directed toward initiatives that support the transition to a greener economy.

This commitment builds on an existing £150 million already invested in climate-related assets through the Local Pensions Partnership Investments’ equity and corporate fixed-income portfolios. In April 2025, the LPFA took a significant step by revising its strategic asset allocation. It introduced a dedicated Environmental Opportunities fund, contributing an additional £250 million and bringing the total commitment to the five per cent threshold.

The LPFA, a key Local Government Pension Scheme authority with over 100,000 members, had signalled this move earlier in the year. At the time, it hinted at a new climate solutions target that would soon be revealed. That promise has now taken shape.

Guidance from the Institutional Investor Group on Climate Change (IIGCC) has historically defined climate solutions as including “activities, goods or services that contribute substantially to or enable emissions reductions to support decarbonisation in line with credible 1.5˚C pathways towards net zero”. When the LPFA refers to “climate solutions,” it is casting a wide net. The term covers a range of sectors and initiatives—from renewable energy and energy efficiency projects to investments in sustainable transportation, industrial decarbonisation, and even ecosystem restoration. That includes everything from reforestation to wetland rehabilitation.

According to the fund, the economic case for investing in net zero has never been more transparent. A recent report by the Confederation of British Industry highlighted that the UK’s net-zero economy expanded by over ten per cent between 2023 and 2024. In monetary terms, that amounts to £83.1 billion in Gross Value Added. Of that, £28.8 billion came directly from businesses operating in the net-zero space. In comparison, the remaining £54.3 billion was generated through related supply chains and broader economic contributions.

For the LPFA, this is not just about ethics or optics. It is a long-term financial play rooted in the belief that climate solutions will be central to the global economy in the years to come.

Jo Donnelly, LPFA’s chief executive officer, said: “Net zero is a strategic priority for us and investing in climate solutions is a vital part of that strategy. It’s about ensuring that we invest in opportunities that help us pay members their pensions when they retire.

“We are pleased to be able to commit to a goal combining existing investments and a specific allocation to Environmental Opportunities. Fund investments do evolve, of course, but we are clear about the opportunities that exist in a low-carbon future.”

Paul Hewitt, LPFA’s responsible investment manager, added: “To set this initial goal, we’ve used current IIGCC guidance to identify existing listed equity and corporate fixed-income assets that can be described as climate solutions. We’ve then built on that to reach the full 5% goal.”

He noted that it is worth pointing out that, currently, there is no guidance on what infrastructure or real estate can be classified as a climate solution.

“This means that our actual investments in this area are likely to be much higher. For example, through our investment in GLIL, we’re invested in projects like Hornsea 1, one of Europe’s largest wind farms. While 5% is a great start, we’ll be revising our targets as more guidance is issued and as the climate solutions market evolves,” Hewitt said.