The London Pensions Fund Authority (LPFA) has presented a new responsible investment policy, which it said will see it increase its monitoring and engagement activity around specific social, governance and environmental issues affecting its portfolio.
The policy comes after the £7.7bn (€9bn) pension fund appointed Paul Hewitt as responsible investment (RI) manager in 2022 to develop a new approach and framework and ensure that ESG considerations are fully embedded in investment decision-making and stewardship.
“The LPFA and our investment managers were already doing great work in RI and particularly around climate change where we have had a policy in place since 2016,” said Hewitt.
“This new policy, though, gives us greater clarity and direction on what sustainability issues are most important to us and when and how we affect positive change together.”
The policy identifies four pillars of importance to the LPFA: climate change, natural capital, the just transition and good governance.
The fund has identified six global themes within those areas that represent the greater risks and opportuntiies for it. These are: renewable energy generation and distribution; pollution and the circular economy; fair pay for workers; diversity, equity and inclusion; accountability and oversight; and cyber security and responsible technology developments.
The Authority, which is targeting net zero portfolio emissions by 2050, said the policy was shaped with input from members.
“We pride ourselves on being a well-run fund and key components of that are transparency and collaboration,” said Hewitt. “While the policy has emerged from the main risks facing the fund, it was important for us to also take stock of members’ views which we did through our member survey in 2023.
“In doing so, we learned from over 3,000 members who responded to our survey that they identify more strongly with social issues than environmental ones, for example, so we’re pleased that our RI policy includes in its priorities fair pay and diversity, equity and inclusion.”
LPFA has over 97,000 members and 122 active employers. Its assets are pooled via Local Pensions Partnership (LPP) together with those of the Lancashire County Pension Fund and the Royal County of Berkshire Pension Fund. Alongside Lancashire, LPFA is also a shareholder of LPP.
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