At LGS the tools employed for Responsible Investment include: -
Negative and postive screens;
LGS SRI Overlay;
ESG and low carbon thematic investments across numerous asset classes;
Quantitative assessment of ESG and carbon risks in our listed equities portfolios;
Engagement with our external managers (who undertake the bulk of daily portfolio investment management in accordance with mandates determined by LGS);
Engagement and proxy voting on ASX and international equities.
LGS is also actively involved in industry groups with directorships of the Austalian Council of Superannuation Investors (ACSI), Investor Group on Climate Change (IGCC) and membership of the UNPRI, Responsible Investment Association of Australasia (RIAA) and Global Real Estate Sustainability Benchmark (GRESB).
LGS' mission statement is: "To provide above average and sustainable investment returns, competitive products, quality personalised service and non-commission driven financial advice".
The LGS vision statement is: " To provide an outstanding retirement scheme for current and former employees of local government while the agreed values for all LGS staff are: trust, integrity, professionalism and unity".
LGS has a long standing commitment to responsible investment. It commenced in 1999 when we excluded tobacco stocks across our equities portfolio and has developed considerably since then. As an asset owner that aspires to be a universal owner with a long term, future looking investment horizon, we believe ESG issues create material investment risks that need to be managed. A well developed responsible investment strategy can both assist in generating long term risk controlled investment returns whilst also aligning ourselves with our members' environmental and social concerns. It is recognised that the long term prosperity of the economy and the well being of members depends on a healthy environment, social cohesion and good governance of the companies in which it invests. Adopting a systematic approach to managing ESG risk in our investments is entirely consistent with and will assist our fiduciary duties of acting in the best interests of our members and achieving strong long term investment returns.
Effectively implementing responsible investment practices requires sound governance procedures and dedicated management attention. For LGS, this has resulted in formal involvement from the Board and executive team, the employment of dedicated internal Sustainbility staff and increasing commitment to sustainability to cover corporate matters.
In future, LGS will continue to monitor its portfolios and external managers for leading practice examples that integrate sustainability with superannuation investment returns. This will continue our journey of developing our capacity in incorporating ESG issues within our investment decision making process with an aspiration to creating portfolio "hedges" or responses against climate change and other ESG risks while maintaining alignment with our members' values. LGS is looking to incorporate ESG considerations and strategies across all our asset classes as long as they meet minimum investment risk reward hurdles.