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Local Pensions Partnership

PRI reporting framework 2020

You are in Indirect – Manager Selection, Appointment and Monitoring » Outputs and outcomes

Outputs and outcomes

SAM 08. Percentage of externally managed assets managed by PRI signatories

08.1. Describe how you ensure that best RI practice is applied to managing your assets

Measures

          Where LPPI identifies that existing managers provide inadequate information from which to evaluate their RI practices we will seek to work with them, specify the features we require from their reporting and monitor their fulfilment of these clearer standards. 
Where it is not possible to evaluate how LPPI's RI Policy is being translated into practice as part of investment and stewardship procedures we will ask for more information and encourage better disclosure.
        
          As outlined elsewhere, LPPI evaluate the RI experience, competence and approach of managers as part of our initial selection process and require a base standard to be evidenced at this point. Where managers are at an early stage of RI/ESG integration and further development is warranted we will work with them to achieve this, setting milestones and sharing insights as part of our support for their evolution in this area.
        

Measures

          Where LPPI sets specific measures and milestones for development we will monitor progress as part of manager dialogue and ongoing review.
        

08.2. Additional information. [Optional]

LPPI routinely asks managers to share examples of their engagement successes, indicate instances of particular best practice or tell us about new approaches to ESG integration and risk evaluation.

In their interactions with managers the RI Team share insights on good practice and new approaches observed elsewhere, aiming to build an impetus for ideas to spread, standards to evolve and there to be an expectation that managers will be compared with their peers. 


SAM 09. Examples of ESG issues in selection, appointment and monitoring processes

09.1. Provide examples of how ESG issues have been addressed in the manager selection, appointment and/or monitoring process for your organisation during the reporting year.

Topic or issue
          Climate change - manager monitoring
        
Conducted by
Asset class
Scope and process

In 2018 LPPI reported having set a target for all extractive fossil fuel companies in our Global Equities Fund to have a Transition Pathway Initiative Management Quality Score  of TPI 2 or above (if in TPI coverage).

In 2019 we increased this requirement, settting a target for extractive fossil fuel companies of TPI 3.

Any manager holding an extractive company scoring less than TPI 3 has been required to provide a clear justification for their more positive assesment of the company's preparedness for transition and governance of the business risks posed by climate change.

Outcomes

Managers holding extractive fossil fuel companies scoring below TPI3 have had to provide convincing justification and supporting evidence. In some cases the review and resulting dialogue concluded with stock being sold.

In one case, a manager brought a strong arguement for an alternative interpretation and this was communicated to TPI. Investigation confirmed a data anomaly and the company's score was increased to TPI3.

Encouraging the manager to provide analysis, listening to a contrary view, following up, and achieving a positive outcome has helped to reinforce a productive client manager relationship. 

 

09.2. Additional information.


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