Responsible investment

Responsible investment is an approach to investing that aims to incorporate environmental, social and governance (ESG) factors into investment decisions, to better manage risk and generate sustainable, long term returns.

We integrate ESG factors into our investment processes, as we believe that they are a core part of our fiduciary duty.

For example, as we support the transition to a low carbon economy, we have identified climate change as one of our key stewardship themes.

We believe strongly that working in collaboration and collectively with our LGPS Central Limited partners, asset managers and through bodies like LAPFF or Pensions for Purpose will increase the likelihood that we will be heard by a company, fund manager or other relevant stakeholder compared with acting alone.

Our guiding principles are detailed in our Investment Strategy Statement.

We participate in LGPS Central Limited for our active mandates. It is our ESG adviser and its approach is detailed in its Responsible Investment and Engagement Framework.

Whilst LGPS Central Limited does quarterly ESG update reports which can be found on its website, we monitor our engagement with companies in our LGPSC portfolios and how the proxy voting of these investments is cast, reporting this to Pensions Committee meetings using geographical, and company name analyses.

We have appointed Legal & General Investment Management to manage our passive equity mandates. It believes in using its scale and influence to bring about real, positive change to create sustainable investor and produces a quarterly ESG impact report that includes a regional voting summary

From an asset allocation point of view, it appears to us preferable to think about ESG impact strategies within the already well-established asset classes rather than as a standalone bucket.

We have been growing our property and infrastructure investments since 2015 with a current target asset allocation of 20%.

Our investments include around 7% in offshore wind farms and other forms of renewable energy.