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The London Pension Fund Authority (LPFA) has set out a new responsible investment policy, saying it will strengthen its oversight and engagement activities on specific social, governance and environmental issues affecting its portfolio.
The policy will see the £7.7bn (€9bn) pension fund appoint Paul Hewitt as Responsible Investment (RI) Manager in 2022, developing a new approach and framework and ensuring that ESG considerations are part of investments. This was done to ensure that it is fully incorporated into decision-making and management.
“The LPFA and the investment managers have already done a great job in RI, particularly on climate change, which they have been setting policy on since 2016,” Hewitt said.
“However, this new policy provides greater clarity and direction around which sustainability issues are most important to us, and when and how we influence positive change. I’ll give it to you.”
The policy identifies four pillars that are important to the LPFA: climate change, natural capital, just transition, and good governance.
The Fund has identified six global themes that represent greater risks and opportunities in these areas. It is renewable energy generation and distribution. Pollution and the circular economy. Fair wages for workers. Diversity, Equity, and Inclusion. Accountability and oversight. Cybersecurity and responsible technology development.
The authority, which aims to achieve net-zero portfolio emissions by 2050, said the policy had been shaped with input from its members.
“We pride ourselves on being a well-managed foundation, and key elements of that are transparency and collaboration,” Mr Hewitt said. “While this policy was driven by the key risks facing the fund, it was also important to understand the views of our members through our 2023 membership survey.
“In the process, we learned from the more than 3,000 members who responded to our survey that they identify more strongly with social issues than with environmental issues. I’m glad that equity is a priority” and inclusion. ”
LPFA has more than 97,000 members and 122 active employers. Its assets are pooled together with those of the Lancashire County Pension Fund and the Berkshire Royal Counties Pension Fund through a Local Pension Partnership (LPP). Along with Lancashire, the LPFA is also a shareholder in his LPP.
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