An East London council will invest a huge £520 million of its pension fund into climate-friendly companies.
Newham Council announced its decision to invest the money into businesses around the world which are “well-run, socially responsible, and active at fighting climate change”.
The council added that the move would help reduce its carbon footprint while promoting environmental and social causes, and that it would avoid investing in companies which profited from fossil fuels, tobacco, or “controversial weapons systems”.
Earlier this year, campaigners criticised Newham Council for investing in fossil fuel businesses – particularly when taxing the borough’s residents for car emissions to reduce CO2.
However, the council stated that the new investment was in line with the 2015 Paris Agreement (COP 21) which aimed to reduce global carbon emissions and keep global temperatures under two degrees celsius.
Newham Council declared a climate emergency in April 2019 and has committed to reducing its carbon footprint.
In June it published its annual climate emergency report which laid out its strategy for doing so, which the council said its pension investment was aligned with
The council is investing its £520 million into companies aligned with the Paris Agreement through a fund run by Legal and General Investment Management (LGIM).
The chair of Newham Council’s pensions committee, Nareser Osei, said that the decision sent a “powerful message” that the council was a responsible and ethical investor.
Terence Paul, cabinet member for finance, added that scrutiny over where the investment went would benefit workers as well as the environment.
He said it showed the council was “committed to managing climate risks while at the same time exploiting the investment opportunities that it presents.”
He added: “In addition this fund will help create better conditions for workers and promote better governance. This fund embraces the council’s values and will play a key role in delivering our climate action plan.”
James Sparshott, head of local authorities distribution at LGIM also welcomed the move.
He said: “ We are delighted that the London borough of Newham pension fund has decided to make such a significant investment into our strategy.
“We recognise the urgency of addressing climate change and continue to experience demand for Environment Social and Governance (ESG) investment strategies.”