LGPS pool progresses climate action plan, aligning most assets with Paris Agreement standards
In the rapidly evolving landscape of Local Government Pension Scheme (LGPS) pooling, Brunel Pension Partnership finds itself at the centre of a significant shake-up. The UK government has directed Brunel and another prominent pool, ACCESS, to merge with another LGPS pool by the end of September 2025.
This directive forms part of a broader strategy aimed at creating fewer, larger pools to better manage the £392 billion LGPS assets and support UK investment goals. The government's intention is to strengthen the LGPS pooling system, ensuring it plays a more prominent role in backing Britain's economic growth.
Despite the government's instruction, Brunel, which manages around £31 billion and boasts a strong track record in responsible investment, has expressed surprise at the merger requirement. Laura Chappell, Brunel's CEO, has emphasised the partnership's achievements, rejecting any suggestion that the need to merge is due to weaknesses within the pool.
Brunel's report, published amidst the upheaval, highlights its ongoing engagement with companies such as Shell. The partnership, along with other LGPS investors, recently backed a shareholder resolution at Shell's annual general meeting, focusing on the oil and gas giant's liquefied natural gas (LNG) expansion. The resolution secured support from more than 20% of shareholders.
Shell's discussions with Brunel involve the company's assumptions about LNG demand growth, alignment with net-zero targets, and the resilience of its LNG portfolio amid the rise of renewables and expected downward pressure on prices.
As part of the merger process, Brunel and its partner funds are working on a business case, exploring options for how to proceed with the merger and the future structure of the individual pension funds involved. The deadline for LGPS pools to report back to the Ministry of Housing Communities and Local Government and the Treasury is June, with funds required to submit an in-principle decision on which pool they intend to join by a meeting scheduled for September.
The report also showcases Brunel's commitment to responsible investment. 92% of Brunel's assets are aligned with Paris Agreement objectives, and 77% of passive and sustainability-labelled bond and equity index-tracking funds in Brunel's listed equity side are aligned with Paris benchmarks.
Moreover, Brunel's private debt portfolio has made notable progress, with 90% of managers overseeing Cycle 3 and Cycle 4 portfolios committing to reporting on carbon emissions. In its infrastructure portfolio, accounting for 4% of total assets, 80% is invested in assets contributing directly to sustainable outcomes.
With 32% of Brunel's assets invested in the UK, the partnership's efforts demonstrate leadership and achieve tangible results, contributing to the UK's investment landscape and sustainable development.
- The government's intention to create larger LGPS pools extends beyond asset management, as it aims to leverage pools like Brunel for supporting UK businesses, such as Shell, in tackling climate-change issues, like Shell's LNG expansion and its alignment with net-zero targets.
- Recognizing Brunel's prowess in environmental-science and responsible investment, the ceo, Laura Chappell, has emphasized the partnership's role in contributing to the UK's investment landscape and sustainable development, with 92% of Brunel's assets aligned with Paris Agreement objectives, and 32% invested in the UK.
