LPPI provides investment management services to public sector pension funds. Our clients are administering bodies with a fiduciary duty to make investments where they will earn the best long-term risk adjusted returns for beneficiaries.
Our assessment of investment risks and opportunities on behalf of client funds involves informed judgements about the quality of company fundamentals and about the operating and wider policy and social context during our period of prospective ownership. We are long term investors and integrating ESG considerations provides a frame of reference for our continual assessment and review process. We believe that companies which understand and manage their governance, social and environmental risks effectively deliver better long-term returns and suffer reduced short-term volatility. In assessing risks and opportunities we are searching for quality and sustainability, characteristics which require a detailed evaluation of the interplay of a range of factors and a forward looking assessment of value drivers.
Our equity portfolio is 100% actively managed, we routinely integrate ESG in our stock selection process, as well as within our engagement with investee companies.
For the part of the portfolio managed internally, processes are conducted by our investment staff and informed by third party proprietary ESG data (the equity team supported by the RI team). For external mandates, our Investment Management Agreements require ESG considerations to be integrated into investment decision-making by all managers we select to work with us.
We favour an open investment universe within which managers can identify and invest in quality companies but recognise the investment risks faced from climate change and have adopted an extraordinary restriction for our Global Equities Fund. We exclude all companies earning +50% of their revenues from the extraction of thermal coal.
In 2019 we have adopted a Policy on Controverisal Weapons which explains how we will seek to avoid investment in companies engaging in defined activities.