Lothian Pension Fund (LPF) has unveiled a strengthened climate change policy that introduces a clear presumption against continued investment in underperforming oil and gas companies, marking a significant shift in how local authority pension schemes are tackling climate risk.
The Edinburgh-based fund, which manages pensions for over 93,000 members across 56 employers, is Scotland’s second-largest Local Government Pension Scheme (LGPS) provider.
In its newly released policy, LPF outlines four key climate commitments, including a roadmap to net zero by 2050, annual disclosures aligned with the Task Force on Climate-related Financial Disclosures (TCFD), and the development of a climate action plan designed to protect the long-term resilience of its investment strategy.
Most notably, the policy introduces a default position against holding equity in fossil fuel companies that fail to demonstrate credible climate transition plans.
“Introducing a presumption against holding shares in laggard oil and gas companies increases our scrutiny of the overall sector,” said Emmanuel Bocquet, LPF’s chief investment officer.
He added that the new approach allows the fund to maintain a broad investment universe while still delivering risk-adjusted returns for beneficiaries.
This marks a bolder stance from a fund that has historically preferred engagement over divestment. The policy signals a pivot toward more assertive stewardship, combining exclusionary tools with a continued focus on engagement and transition alignment.
Gillian de Candole, head of responsible investment at LPF, emphasised the systemic risk posed by climate change: “Our new climate change policy sets out the actions we’re taking to enhance the resilience of our investment strategy, as well as how we support the real-world transition to net zero.”
She highlighted that such a transition demands significant structural changes in the global economy – particularly a move away from fossil fuels.
The new policy comes at a time of increasing scrutiny over pension fund exposure to high-carbon sectors. LPF’s move may influence other LGPS funds in the UK, where policy alignment on climate-related issues remains uneven.
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