Hackney Council’s pension committee has committed to reducing the fund's fossil fuel investments by 50 per cent over the next six years.

The decision has been made by the committee following a review that looked at financial risks posed to the fund’s fossil fuel investments in light of the Paris Agreement, a global action plan to help limit global warming.

In order to achieve this the committee has announced a new investment strategy which will reduce the fund’s exposure to fossil fuel investments, measured by future CO2 emission levels, initially by 50 per cent over the next six years. The fund expects to move away from fossil fuel investment in the longer term.

This latest move follows a year-long piece of work to address concerns from local residents and campaign groups regarding the pension fund’s investment in fossil fuels.

Throughout the last year, significant steps towards greener investments were made including the investment of £20m, with an additional £5m planned for February, into a ‘low carbon workplace’ fund, which transforms office buildings into energy efficient, low emission workplaces. Further changes to help the fund meet its ambitious target are planned for the next financial year.

Pensions committee chair Cllr Robert Chapman said: “Climate change is probably the greatest threat facing humankind. There is also a threat to our pension fund in that investments in fossil fuel assets become ‘stranded’, which means that they’ll lose their value as a result of necessary world-wide action against climate change.

“The fund’s long-term ambition is to move away from fossil fuel investments, and I can foresee a time when our fund will have no fossil fuel investments. Our ambitious target to reduce the fund’s exposure to future CO2 emissions by 50 per cent is the first step on that journey and demonstrates our commitment to taking an active approach to address fossil fuel concerns. We are the first London borough to set ourselves a clear risk reduction target within a realistic amount of time in order to make the necessary changes with the minimum of risk.

“This is a significant step further forwards alongside the other work that is being undertaken to move the fund towards greener investments. However, we must ensure that any changes to how the Hackney Pension Fund is managed are taken extremely carefully. Our first responsibility is towards those whose pensions we manage as well as other stakeholders, which include local Council taxpayers. We have to ensure that the pension fund receives the best returns possible, and also comply with the various legal duties associated with managing a large pension fund.”

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