‘Green’ pensions fund fossils

An investigation has found UK public-sector pensions sold as climate-aware are still financing US gas buildout through hard-to-see private funds. (thebureauinvestigates.com) The Bureau of Investigative Journalism reported on April 22 that 60 Local Government Pension Scheme funds had put a combined £8 billion into vehicles backing gas infrastructure on the US Gulf Coast. The scheme in England and Wales has 86 local funds and about 6.9 million members. (thebureauinvestigates.com) (lgpsmember.org) The reporting said the money flowed through opaque infrastructure funds rather than direct shareholdings in oil and gas producers, making the exposure harder for members and councillors to spot. London CIV, one of the Local Government Pension Scheme pools, says it runs pension assets across public and private markets and integrates environmental, social and governance factors across its funds. (thebureauinvestigates.com) (londonciv.org.uk) That structure matters as the UK tightens rules on green claims. The Financial Conduct Authority’s anti-greenwashing rule took effect on May 31, 2024, requiring sustainability-related claims about financial products and services to be fair, clear and not misleading. (fca.org.uk) (gov.uk) The pension story also lands as ministers push Local Government Pension Scheme pooling further. The government said in its “Fit for the Future” response that the scheme is set to grow to £1 trillion by 2040 and is moving toward tighter pooling, governance and reporting rules. (gov.uk) Private markets are a big part of that shift, and they come with a visibility problem. BlackRock’s Ian Ellerker wrote in March that private assets in the pension pools bring “opaque valuations” and bespoke reporting requirements that make oversight harder than in listed markets. (room151.co.uk) Many Local Government Pension Scheme funds already market climate ambitions to members. XPS Group said in September 2024 that 49% of funds it reviewed had set a net-zero target and 74% had moved some assets into strategies with sustainable objectives. (xpsgroup.com) The Bureau said some councillors and members are now pressing for “look-through” disclosure, meaning pension funds would show the underlying assets inside private vehicles rather than only the fund names. Baroness Hayman told the outlet UK pensions hold £3 trillion and should better protect savers from climate-related financial risk. (thebureauinvestigates.com) Fund managers say environmental, social and governance analysis is already part of how they invest. IFM Investors, named in the reporting, says it manages $86.3 billion in infrastructure investments and presents sustainable investing as part of its approach. (ifminvestors.com) (thebureauinvestigates.com) The immediate fight is over what a “green” pension label should cover when money passes through several layers of funds before it reaches a project. The answer now depends less on marketing language than on whether regulators, pools and local funds force the underlying holdings into view. (fca.org.uk) (thebureauinvestigates.com)