LGPS investment pool progresses its climate plan, as the majority of its assets conform to Paris agreement standards
Brunel Pension Partnership, a UK Local Government Pension Scheme (LGPS) pool managing £35bn on behalf of 10 LGPS funds, is currently engaged in negotiations with Shell regarding the energy giant'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.
The discussions are set to continue in September, when funds will submit an in-principle decision on which pool they intend to join. Laura Chappell, chief executive of Brunel, has expressed optimism about the partnership, stating that it is showing leadership in these areas and achieving tangible results.
However, Brunel is facing uncertainty due to a government directive issued in April 2025, which requires the pool to merge with another LGPS pool or form new alliances to reduce the number of LGPS pools from eight to six. The government has set a deadline of 30 September 2025 for decisions, and a transition is expected by March 2026.
This sudden directive has caught Brunel's officers and members off guard, as they were fully committed to the existing pooling arrangements. There is ongoing discussion among the constituent funds of Brunel about whether to move collectively to another pool or to break away independently. This uncertainty is compounded by leadership changes at Brunel, including the recent appointment of a new Chair, Patrick Newberry.
The government has also introduced legislative powers to enforce pool participation if no agreement is reached by the deadline, aiming to reduce fragmentation and increase investment scale and efficiency. Meanwhile, the LGPS Scheme Advisory Board acknowledges the challenges and aims to support the affected pools and funds as they navigate these difficult decisions.
In other news, Brunel has made significant strides in its responsible investment practices. The responsible investment report of Brunel Pension Partnership, published on 27 May, reveals that 77% of passive and sustainability-labelled bond and equity index-tracking funds in Brunel's listed equity side are aligned with Paris benchmarks. Furthermore, 92% of Brunel's assets are aligned with Paris Agreement objectives.
Brunel has also been active in its stewardship efforts. Last week, it was one of three LGPS investors that backed a shareholder resolution at Shell's annual general meeting, focusing on the company's liquefied natural gas (LNG) expansion. The resolution secured the support of more than 20% of shareholders.
In its infrastructure portfolio, 80% of assets are invested in assets contributing directly to sustainable outcomes. Notable progress has been made in Brunel's private debt portfolio, with 90% of managers overseeing Cycle 3 and Cycle 4 portfolios committing to reporting on carbon emissions.
The hope and expectation of Brunel is that others will follow the same trail in these areas. As the negotiations and potential mergers unfold, Brunel continues to strive for leadership and tangible results in responsible investment and sustainable outcomes.
- In the midst of negotiations with Shell about LNG demand growth and net-zero targets, Brunel Pension Partnership is also demonstrating leadership in responsible investment, having aligned 77% of its passive and sustainability-labelled bond and equity index-tracking funds with Paris benchmarks and 92% of its assets with Paris Agreement objectives.
- Despite the uncertainty caused by the government's directive for pool mergers and the associated leadership changes at Brunel, the partnership continues to push for environmental outcomes in its infrastructure investments, with 80% of assets invested in assets contributing directly to sustainable outcomes and 90% of private debt portfolio managers committing to reporting on carbon emissions.
