Climate Change

At Lothian Pension Fund, we recognise climate change as a critical factor affecting future investment returns. It is an existential threat recognised by the 197 countries attending COP26 in Glasgow in late 2021, requiring cooperation and significant actions to reduce greenhouse gas emissions around the globe. Consequently, it is driving government policies, corporate actions, and investor behaviour.  

In June 2021, we released our Statement of Responsible Investment Principles, which not only lays out our approach to climate-related change, but also our approach to all aspects of responsible investment and our plans for ongoing disclosure of our investment activities across all asset categories.  

We believe that accurate measurement of emissions is key to assessing the climate risk of a portfolio, and we’ve committed to assess the carbon intensity of all assets by the end of 2022. While we have publicly reported these for our equity holdings in recent years, we will extend this to other asset classes where data availability has been poor. We’re working hard with our managers, industry standard setters, and other asset owner networks to improve the quality of available data.  

The UK Government is leading the world with its announcement in 2021 that emissions reporting (under the TCFD framework) would be mandatory by 2025. We hope to be able to provide this earlier with 2022 being our very ambitious target. While we believe that all roads lead to ‘net zero’, we want to fully understand the consequences and have a clear roadmap of how we will achieve it before we make a public commitment. We are undertaking significant work on our own and with other asset owners, external groups, academics, NGOs and investment managers, which reflects the fact that this is an extremely high priority. 

We have, however, made some important commitments to ‘Paris alignment’ within the Fund. We focus on real world impacts, and are, therefore, unwilling to provide any new financing to companies which aren’t aligned with the goals of the Paris agreement. And we use voting and engagement to influence companies, where we have partial ownership, to commit to Paris alignment. We do this on our own, but often more effectively with other asset owners.   

In practice, we largely ‘Engage our Equity and Deny our Debt”.  This is because buying or selling listed equities (shares) doesn’t affect the capital position of a company (it receives no cash), whereas subscribing to new bond or equity issuance does – it usually receives cash to invest. We expect our approach to gain traction as a more effective means of effecting real change and real reduction in greenhouse gas emissions than divestment.  

We’re grateful for your interest in our responsible investment work. You can learn more in our other publications, including ENGAGE and our annual report. 


  • ENGAGE Autumn 2021

  • ENGAGE Spring 2021

  • Annual Report 2021

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