The Environment Agency is cutting its pension fund investments in fossil fuels to bring it in line with efforts to prevent dangerous climate change.
Under the plans the Environment Agency Pension Fund (EAPF) will invest 15% of its £2.7billion fund in low carbon and energy efficient technology and reduce investment in coal by 90% and oil and gas by half, in terms of carbon emissions, by 2020.
The change by the Government agency aims to make sure its investments are compatible with international agreement to keep global temperature rises to 2C – seen as the threshold beyond which dangerous impacts of climate change will occur.
The agency manages flood risks from rivers and the sea as part of its work, with flooding expected to become a more serious problem for the UK as temperatures rise.
The EAPF said its decision was not a “knee-jerk reaction, but a culmination of over a decade’s worth of work” considering climate change as part of its investment strategy, which has seen it cut its carbon footprint by 44% since 2008.
Fossil fuel investments currently make up 2.5% of the fund’s total investments by value.
The latest moves demonstrated to pension fund members it had a “credible plan to deliver strong long term financial returns as the impacts of climate change materialise”, it said.
An Environment Agency spokeswoman said: “We are actively planning for a changing climate, building predictions in to the design of flood schemes and working with partners to improve water quality and supply.
“With the evidence gained from 10 years of responsible investing, we are very confident that the fund’s new climate objective is compatible with generating good returns, managing risk and meeting the funding objectives.”
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