Improved monitoring on portfolio ESG characteristics has improved communication and transparency. Staff briefings on progress lead to communication of this work beyond the investment staff.

We have engaged with managers with a view to changing behaviour and driving innovation in the ESG space. For example, during the period we

• Led an exercise which led to the creation of an innovative new emerging markets equity fund which is both explicitly fossil fuel free and integrating ESG. We acted as the anchor investor seeding this new innovation by Acadian Asset Management.
• Supported new innovative approches to passive low carbon equity investing.
• Acted as an early investor supporting a new fossil fuel hedge fund.
• Based on manager responses to an ESG questionnaire, during the period we conducted an exercise reaching out to our managers over key issues around ESG integration, their own voting and engagement activity, and reporting on such activity. 

Improved visibility on the ESG and RI characteristics of the portfolio as below helps inform this activity.

Substantial reductions in fossil fuel exposure were achieved during the period in keeping with the medium term plan. We made new fossil fuel free commitments to developed markets long only equity, emerging markets long only equity, passive global equity, private equity and hedge funds. Our key segregated fixed income fund is already divested. Specifically in emerging markets, we seeded a new fossil fuel free equity fund integrating ESG from Acadian Asset Management.

We also made progress on the objective to invest in proactive solutions to a low carbon economy, notably a new commitment to a private real assets fund focussing on renewable power generation.

We continue to have dialogue with investment managers to change behaviour drive new product creation for sustainable investments promoting a low carbon economy. As an example, during the reporting period we gave feedback during the design phase for a new clean energy equity fund. Based on our engagement, the manager refined their clean energy investable universe and made the fossil fuel exclusion clearer and more transparent. These changes were reflected in the fund documentation prior to its launch. We also made recommendations for their voting policy. We subsequently invested in this fund after the reporting period.

GMG completed the first report one year earlier than required. We then took part in a feedback meeting with UN PRI reporting staff to better understand this first assessment and target areas for improvement. 

We also gained improved insight into the ESG and RI characteristics of our portfolio. This included both manager level information (ESG and responsible investment policies etc.), and detailed analysis of the underlying holdings of our portfolio held via external managers – this latter work involved carbon emission footprinting and ESG scoring using 3rd party ESG analytical tools on all three pillars. This established a baseline for detailed monitoring of progress on ESG issues going forward.

The ESG characteristics of the portfolio has improved both at a manager and underlying level due to re-allocations to ESG focussed managers during the period. This occurred across asset classes –developed market equities, emerging market equities, hedge funds and private investments.

We also made proactive investments into clean energy investments during the period, in keeping with objectives to seek proactive investments in solutions to a sustainable and low carbon economy.

Towards the end of the period we joined ShareAction's CRIN (Charities Responsible Investment Network) and Institutional Investors Group on Climate Change (IIGCC). These will provide platforms for RI initiatives and engagement going forward.

We continue to give exposure to key RI initiatives around ESG, fossil fuel divestment and investment transparency. Our lead role in the Panama Papers investigation was a globally recognised landmark example of the latter.

https://www.theguardian.com/environment/series/keep-it-in-the-ground

https://www.theguardian.com/news/series/panama-papers