AUM in Action

UK Pension Fund Backs Paris-Aligned Derivative  

Avon Pension Fund, a Local Government Pension Scheme for the West of England, has invested £700 million into a total return swap investment product referencing Paris-aligned indices. The derivative-based product, created by its asset manager BlackRock, has been designed to release liquidity to support other areas of the investments portfolio while expressly supporting the low carbon transition. In total, Avon now holds over £1 billion (US$1.24 billion) in dedicated Paris-aligned index equity strategies and has moved away altogether from using standard market-cap indices. Paris-aligned indices are designed to replicate investments in companies who’ve pledged to back efforts to limit global temperature rises to 1.5°C. This sits alongside Avon’s existing £575 million sustainable equity investment strategies and £400 million allocations to investments in renewable infrastructure projects such as solar farms.  Nathan Rollinson, Investment Manager at Avon Pension Fund said: “This new investment will help us as we work towards our net zero goals. We’re on track to lower the carbon emissions of our equity portfolio by two-thirds by 2030, compared with 2019.” 

 

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