The Environment Agency Pension Fund (EAPF) has selected a low carbon index from MSCI for its global passive equities portfolio of £280 million, which is around 10% of the fund’s assets.
The EAPF’s chief investment officer, Mark Mansley, said: “For us, climate change is an investment risk issue – so we wanted a benchmark which takes a risk-based approach, rather than simply excluding certain stocks. We engaged with the industry to find a solution and felt the MSCI understood the needs of institutional investors when they developed the Low Carbon Target approach.”
MSCI has developed a series of low carbon indices for investors concerned about climate change and its impact on their investments. The index will be used for a new institutional pooled fund, the MSIC World Low Carbon Target Index Fund, which will be managed by Legal & General Investment Management. The fund is open to other UK pension funds and it aims to provide lower carbon exposure than the broad market, by overweighting companies with low carbon emissions and low potential carbon emissions.