A £2.6 billion public sector pension fund will channel more of its wealth into green investments and reach a "net zero" position by 2037.
Councillors who oversee the City and County of Swansea Pension Fund made the decision following advice from officers and finance experts.
Net zero means that the pension fund overall would not contribute to climate change.
Cllr Clive Lloyd, pension fund committee chairman, said the move was "ground-breaking".
The fund has already reduced its carbon investments in shares by 58%, but a council report said its remaining investments and holdings still implied a temperature rise of around 3.5C.
This implied rise is a calculation which converts the current and projected greenhouse gas emissions of a company or fund to an estimated rise in global temperature.
The fund's managers will now seek to reduce the implied temperature rise to 1.5C by 2030 with a series of measures.
These include putting more money into investments which supported a transition to a green economy, and reducing the proportion of its fossil fuel portfolio from the current 9% to zero.
There will also be more engagement with companies the fund invests in, and increased monitoring of the fund to check how the measures were working.
A commitment to funding tree-planting projects and sustainable agriculture is also being explored.
A representative from the pension fund's advisers, Hymans Robertson, told the committee that the net zero strategy would put the fund "at the forefront of what pension schemes and other people are doing in general".
He said the targets were achievable but that there would become a point where a "trade-off" between investment returns and the low-carbon investment approach would be required.
Cllr Lloyd said the committee didn't have a big appetite towards risking the overarching fiduciary duty to the fund's thousands of members.
He said the committee would be "well warned" ahead of time if there was a risk to financial returns.
The pension fund covers Swansea and Neath Port Talbot councils, plus other public sector employers, and has just over 20,000 paying contributors and 13,600 pensioner members.
Its value soared from £1.98 billion at the end of March 2020 to £2.61 billion a year later.
Speaking at a meeting in September, Jeff Dong, the council's deputy chief finance officer, said: "It's quite staggering, basically, the returns the funds have achieved in the year."
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