**Dyfed Pension Fund Beats Greenhouse Gas Reduction Goals, Accelerates Responsible Investment**
A major public sector pension fund covering parts of Wales is making significant strides in its efforts to reduce its carbon footprint, regularly surpassing its in-house environmental targets. The Dyfed Pension Fund, which represents the retirement interests of council and public sector employees from Mid and West Wales, has seen its investments steadily transition away from companies with high carbon emissions—a development that experts say points to wider change in the financial sector.
At the end of March 2024, Dyfed Pension Fund was managing assets valued at £3.46 billion, with a substantial portion—between 65% and 70%—invested in equities, or company shares. Some years ago, fund administrators committed to lowering the fund’s exposure to particularly carbon-intensive businesses by 7% annually, using September 2020 as their starting point.
Anthony Parnell, treasurer and pension investments manager at Carmarthenshire Council (the fund’s host authority), reported at a recent committee meeting that these efforts had led to an average annual reduction of 13.9% in carbon-heavy holdings between September 2020 and March 2025. Although the 2024-25 financial year saw a slower decrease of 10.7%, the overall progress remains ahead of the original 7% yearly target.
“It’s moving in the right direction,” Mr Parnell told the Dyfed Pension Fund committee, referring to the objectives to divest from high-polluting sectors. He added, “We have overshot that [target] and we continue to work to reduce that further going forward.”
Like many other large institutional investors, the Dyfed Pension Fund has faced mounting pressure from environmental campaigners to distance itself from investments in fossil fuel companies and other industries with significant greenhouse gas emissions. Balancing these expectations, however, is the fund’s responsibility to act in the best financial interest of its members—present and future pensioners.
Behind the fund’s evolving investment strategy is its involvement in the Wales Pension Partnership (WPP), a collaborative project uniting eight public sector pension funds across Wales to pool resources and advance responsible investment. Under the WPP, the funds have enlisted specialist agencies to engage directly with major corporations on environmental and social responsibility topics.
One such engagement is managed by Robeco, a global investment firm tasked with advocating for better practices in the companies held by the pension portfolios, from responsible palm oil production (an issue linked to both biodiversity loss and deforestation) to climate change alignment. Robeco’s remit includes communication and negotiation with blue-chip companies such as BP, Shell, Starbucks, Samsung Electronics, and Tesla.
Robeco recently led a group of investors in writing to the chairman of BP, reminding the company of commitments it made in 2019 to align its business plan with the 2015 Paris Agreement’s climate goals. This resolution, which carried overwhelming shareholder support, set the expectation for BP to transition more rapidly towards greener business models—a demand now echoed by its investors, including those representing public sector funds in Wales.
Furthermore, Robeco has been proactive in seeking a stronger voice on climate at BP’s annual general meetings, seeking to ensure both accountability and transparency from the energy giant. Such moves highlight how institutional investors are now leveraging their financial influence to shape corporate policy in response to global climate challenges.
Observers note that the Dyfed Pension Fund’s ongoing reductions in carbon exposure reflect not only public demand but also shifting regulatory and commercial realities. With more pension funds and asset managers integrating environmental, social and governance (ESG) criteria into their investment decisions, transparency and long-term sustainability are fast becoming industry benchmarks.
As markets, policymakers, and civil society continue to push for responsible investment, the Dyfed Pension Fund’s accelerated progress in cutting its carbon footprint may serve as an encouraging example for other large funds contemplating similar action in the years ahead.