Investment in long term low carbon projects

Meeting: 
MQT on 2013-12-18
Session date: 
December 18, 2013
Reference: 
2013/4994
Question By: 
Murad Qureshi
Organisation: 
Labour Group
Asked Of: 
The Mayor
Category: 

Question

With reference to MQ 2013/3193 you state that "the London Pension Fund Authority has certain internal required rates of return that it must achieve in order to be able to fund its liabilities". What are these IRRs and has any analysis been undertaken whether the LFPA could - as other councils have done - directly invest in long term low carbon projects in London such as solid wall insulation retrofits, district heating and solar power projects?

Answer

Answer for Investment in long term low carbon projects

Answer for Investment in long term low carbon projects

Answered By: 
The Mayor

Individual IRR targets will depend on several factors including the liquidity, duration and risk profile of a given investment together with how these might fit into the overall funding strategy. Around 4 per cent of the LPFA's portfolio is currently invested in sustainable/renewable projects which include solar power, wind farms, biomass heating systems and plastic recycling plants. Some of these projects are in London, for example, a project pipeline through Q1 2014 across the Greater London region including investments in anaerobic digestion, waste-to-energy and recycling facilities. These investments arise solely because of their standalone merits in terms of generating returns; the LPFA's investment strategy does not prescribe a target allocation for low carbon projects. The LPFA does, however, encourage the companies that it invests in to adopt environmental, social and corporate governance best practice, as the Authority believes this will sustainably deliver better long term returns.