LGPS Central has launched a multi-factor equity fund with climate considerations core to its investment process.
The £45bn local authority pool's Cheshire Pension Fund and West Midlands Pensions Fund will provide initial investment.
The All-World Equity Climate Multi Fund will track the FTSE All-World Climate Balanced Comprehensive Factor Index; this incorporates carbon emissions, fossil fuel reserves, and green revenues as key considerations.
The Local Government Pension Scheme (LGPS) pool said the fund has been designed to balance the risks and opportunities associated with climate change with strong investment returns over the long-term.
The fund will be tilted away from companies with greater carbon emissions and fossil fuel reserves and specifically toward those with green revenues.
The strategy will be managed by LGPS Central's in-house investment team with monitoring taken in line with its framework for responsible investment.
Chief executive Mike Weston said: "The pool is fully aware of the risk and challenges that climate change poses - not only for the planet but also for investment returns - and our new fund enabled us to align our shared sustainable investment ethos with our long-term investment goals."
The LGPS pool manages assets for nine partner local authority funds: Cheshire, Derbyshire, Leicestershire, Nottinghamshire, Shropshire, Staffordshire, Worcestershire, West Midlands, and the West Midlands Integrated Transport Authority.
Meanwhile, Local Pensions Partnership Investments has launched the first pooled LGPS real estate fund and its eighth pooled vehicle dedicated to a specific asset class.
The fund has launched with more than £800m of direct UK property investment assets and will have £460m of property assets transition into it within the coming months.
Capital is deployed to meet the pension schemes' agreed allocations to real estate and the fund is expected to eventually reach around £2 billion assets under management.
LPPI said pooling the property assets of its three public sector pension schemes will provide more diversified exposure to a wide range of national and international real estate.
Approximately £1.7bn of real estate assets were previously managed via separate mandates for each of LPPI's pension fund clients, namely the Lancashire County Pension Fund, the London Pension Funds Authority, and the Royal County of Berkshire Pension Fund.
LPPI chief executive Chris Rule said: "We are proud of our record in delivering a diverse range of high quality, low cost and distinctive investment propositions to meet clients' asset allocation requirements.
"The LPPI Real Estate Fund represents another important milestone in LPPI's three-year history."
The pool manages a total of £17.4bn in assets.
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