Introduction
The detail contained in this Climate Position Statement is designed to complement the Fund’s Investment Strategy Statement, which addresses climate change in high-level terms only, consistent with guidance relating to the Local Government Pension Scheme (Pooling, Management and Investment of Funds) Regulations 2026 (the ‘2026 Regulations’).
Under the 2026 Regulations it is permissible for Funds to develop and maintain their own set of Responsible Investment (RI) beliefs and objectives. At the same time, primary advice and asset allocation decisions now sit with the Pool and for this reason any climate strategy should be capable of being delivered through pooled implementation.
Climate Beliefs and Principles
The Fund believes that investing in transition-aligned strategies that reduce exposure to climate risk, combined with robust engagement with companies regarding their climate strategies, is the most effective approach to meeting the Fund’s fiduciary duty and climate objectives.
Specifically, the Fund believes:
- Management of the financial risk posed by climate change is consistent with the Fund’s legal obligation to deliver returns for its members and employers
- Climate change poses an existential threat to long-term investments as well as to the planet
- We believe in investing responsibly to make a real-world impact rather than investing to deliver portfolio-specific outcomes in isolation
- Climate-aware investments are fundamentally more sustainable which translates into better risk-adjusted returns in the long term
- Working with like-minded investors to collectively engage companies and policymakers can drive positive change
The Fund employs limited use of activity-based exclusions on the grounds of financial risk and at the same time accepts that focussing on the intended outcome sought by an exclusion rather than the exclusion itself, might be an equally as effective approach to deliver desired outcomes.
| Responsible Investment | Metric |
|---|---|
| Exclusions | Maintain no investments exposure to issuers:
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The Fund will consider non-financial factors provided that doing so will not involve significant risk of financial detriment to the Fund and where it can reasonably conclude that scheme members would support the decision.
The Fund will rely on its Pool to provide advice on the suitability of setting preferences to invest or not to invest in particular sectors based on expected costs, scale and delivery that different approaches are expected to incur.
Climate targets
Targets were originally agreed by the Committee in 2022 and are kept under review to ensure the appropriate level of ambition continues to be met. Targets will necessarily evolve to take account of the wider macro environment as well as new pooling arrangements.
For instance, the Fund sees best practice moving towards a focus on alignment of underlying investee companies rather than divestment, as this approach strikes the balance between avoiding heightened financial risks (e.g. discounting large portions of the investable universe with implications for diversification and return potential) while still demonstrating ambition and a commitment to real-world impact.
| Net zero objectives | Metric |
|---|---|
| Net zero – whole Fund | Net zero on financed emissions by 2045 |
| Climate solutions | Maintain at least 12% of the strategic asset allocation in climate solutions (1) |
| Decarbonisation – listed equities |
|
| Decarbonisation – corporate bonds |
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| Divestment | By 2030, divest from all developed market equity holdings in high impact sectors (2) that are not achieving net zero or aligning to achieve net zero by 2050 |
| Stewardship / engagement | For listed equities, ensure 90% of financed emissions in material sectors are either aligned, aligning or subject to direct or collective engagement by the end of 2027. |
The Fund analyses how it is performing against its respective climate targets each year and discloses the results in an Annual Responsible Investment Report.
- Climate solutions investments are investments in economic activities considered to contribute to climate change mitigation (including transition enabling) and/or adaptation, in alignment with existing climate-related sustainability taxonomies and other generally acknowledged climate related frameworks source: Net-Zero Asset Owner Alliance (NZAOA). The stated objective allows for a ‘look through’ of the Fund’s portfolios.
- Currently in scope are listed companies on the Climate Action 100+ focus list; companies in high impact sectors consistent with the Transition pathway Initiative sectors; alignment assessment based on the Institutional Investors Group on Climate Change (IIGCC)’s Net Zero Investment Framework (NZIF).
Approved by Avon Pension Fund Committee September 2026