A public sector pension fund worth more than £2 billion is to move a chunk of its investments into low-carbon products.
Members of the Dyfed Pension Fund committee approved a recommendation to allocate assets to a new product which will screen out companies with exposure to fossil fuel reserves and coal for power stations.
It will also increase its existing allocation to a separate low-carbon fund.
The committee was told that taking these measures would reduce the carbon footprint of Dyfed Pension Fund’s total equity – or share – holdings by around 16%, and that such holdings accounted for 72% of the fund’s total value.
The money for these allocations will come from existing assets held by the fund, which is administered by Carmarthenshire Council and has 66 employer organisations.
After agreeing unanimously to the recommendations, Chris Moore, Carmarthenshire Council’s director of corporate services, said: “I think this is quite a substantive move forward and is going in the right direction, not only in terms of ensuring that we have still got diversification but also ensuring that we actually respond to the low-carbon objective of this fund and to reduce our investment in fossil fuel-related items.”
Dyfed Pension Fund adviser Adrian Brown said there was more it could do on the low-carbon objective, but added: “I would stress that it’s important to do this thoughtfully and gradually, not least because of the volatility of relative price movements.”
Cllr Deryk Cundy asked about the impact of Joe Biden being elected as the United States president on this area.
Mr Brown said investors would have already priced in the Democrat’s greener policies, and that “the pain” was likely to be felt in high yield US shale oil products.
Anthony Parnell, Carmarthenshire’s treasury and pension investments manager, said the decisions taken by the pension committee were a step in a journey to review low-carbon and fossil fuel investments.
“To get further along that journey we need to do due diligence again,” he said. “So it’s a good step forward but these things do take time.”