UK - The Environment Agency has handed Royal London Asset Management the contract to manage a £55m (€81.5m) UK corporate bonds mandate, with SRI restrictions on the type of investments selected.

The Agency said "confident that environmentally-friendly investments can be made whilst maintaining the best risk-reward ratio" RLAM has been named as the latest specialist fund manager to look after its 3.6% allocation in UK non-gilt fixed income bonds.

There appear to be strong restrictions on the mandate, as Howard Pearce, head of environmental finance and pension fund management at the Environment Agency, said aside from the requirement to outperform the iBoxx Sterling Non-Gilt All Maturities Bond index by 1%, RLAM's performance is also being "evaluated in relation to their delivery of the Active Pension Fund environmental overlay strategy".

More specifically, this means the firm will have to place environmental and corporate governance considerations on any investment bond selection they make and refer any environmental resolutions to the Environment Agency.

"Their relative performance will also be benchmarked using corporate governance and socially responsible investment indices and environmental reporting tools. Under the Local Government Pension Scheme investment regulations, the [three-year] contract can be terminated if perfoarmance is below that needed," said Pearce.

EIRIS, the specialist provider of socially-responsible investment (SRI) research, was last month selected by RLAM to provide the asset manager with data for its ethical bond trust and will now support RLAM in its implementation of the fund's SRI strategy.

The £1.5bn scheme was advised by Mercer Investment Consulting, Rathbone Greenbank and b-finance in its search for an appropriate manager.

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