UK Pension Funds Pledge Close to £300M into Green Energy and Innovation

In a bold move underscoring the rising tide of sustainable finance, two of the UK’s largest public pension investment pools have unveiled more than £330 million in fresh commitments—aimed squarely at renewable energy, climate-resilient infrastructure, and groundbreaking healthcare initiatives.

The London Pensions Fund Authority (LPFA) is taking the lead, earmarking a striking £250 million—around 3% of its £8 billion portfolio—toward environmental assets. Local Pensions Partnership Investments (LPPI) will manage this allocation through its newly launched Environmental Opportunities Fund, a vehicle specifically tailored to accelerate the fund’s march toward net-zero emissions.

This announcement is not unexpected. It builds on LPFA’s 2021 pledge to transition to a net-zero investment portfolio by 2050.

The LPFA’s chief executive, Jo Donnelly, said: “The impact of climate change poses a financial risk to pension funds like ours, so we’re taking climate action to protect our members’ pensions.

“Our net-zero commitment means engaging with our existing investment managers to reduce our portfolio carbon emissions while also investing in companies that help our society transition to a low carbon future.”

Since then, the fund has aligned itself with the Net Zero Investment Framework, a strategy developed by the Institutional Investors Group on Climate Change (IIGCC). And there’s real urgency behind it: a recent analysis warns that physical and transitional climate risks could shave more than 20% off UK pension returns by 2040 if left unaddressed.

Meanwhile, the Border to Coast Pensions Partnership manages assets on behalf of 11 UK local government pension funds—collectively worth around £55 billion—and has confirmed £80 million in new UK-focused investments under its £500 million UK Opportunities strategy.

Half of that sum—£40 million—is backing life sciences real estate in the so-called “Golden Triangle,” which connects Oxford, Cambridge, and London. The rest is being funnelled into Quinbrook Renewables Impact Fund II, which targets high-impact wind and solar energy projects alongside the supporting grid infrastructure essential for scale.

Border to Coast’s chief investment officer, Joe McDonnell, said: “These investments are a prime example of what our UK Opportunities strategy is all about – investing in UK productive assets, such as new infrastructure projects, that improve our country’s capacity for economic growth, while also delivering good risk-adjusted returns to our partner funds over the long term.”

Parallel to these investment announcements, a powerful policy voice is calling for reform. The UK Sustainable Investment and Finance Association (UKSIF) has released a detailed report, “Unlocking UK Pension Capital for Sustainable Growth,” that urges a systemic overhaul of the UK pension framework.

UKSIF, representing 300 member organizations managing over £19 trillion globally, argues that pension funds remain a vastly underutilized force in driving green growth. With trillions in capital under management, UK pension schemes could play a transformative role in scaling up investments into clean energy, low-carbon infrastructure, and sustainable innovation—if the right regulatory signals and incentives are in place.

Critically, the report warns against simplistic solutions like mandating domestic-only investments. Instead, UKSIF calls for regulatory clarity, long-term consistency, and a strategic alignment with global frameworks. Among the recommendations:

• Update fiduciary duty guidance for pension trustees to empower climate-conscious investment decisions.

• Reform auto-enrolment, address the gender pension gap, and enhance systemic pension adequacy.

• Create an industry-led task force to align UK sustainability disclosure rules with international standards, such as the ISSB.

• Apply a sustainability lens to upcoming reforms, including the Value for Money Framework and new rules around surplus extraction from defined benefit plans.

Taken together, these developments represent a turning point for how the UK’s pension sector engages with the climate crisis—and with the broader challenge of long-term, inclusive economic resilience. Capital is clearly moving. What remains is the urgent task of aligning policy with potential.