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Local Pensions Partnership

PRI reporting framework 2020

You are in Direct - Listed Equity Active Ownership » Engagement

Engagement

LEA 02. Reasoning for interaction on ESG issues

Indicate the method of engagement, giving reasons for the interaction.

Type of engagement

Reason for interaction

Individual / Internal staff engagements
Collaborative engagements
Service provider engagements

02.2. Indicate whether your organisation plays a role in the engagement process that your service provider conducts.

02.4. Additional information. [Optional]

If material issues arise in the internally managed portfolio investment staff will progress engagement directly with investee companies.  Additionally, engagement may be taken forward through a collaborative route if a suitable opportunity is available and the likelihood of having an influence on a company is greater.

LPPI is networked with a number of groups and representative organisations which help to facilitate joint engagement alongside other pension funds and investment managers. Examples include the Pensions and Life Saving Association (PLSA) the UK Pension Scheme RI Roundtable, PRI, the LGPS Cross Pool RI Group, and Climate Action 100+.

LPPI works with an external provider of proxy voting services and we identify shareholder voting as part of our engagement activities. We review detailed meeting information and the in-depth company analysis produced by our proxy voting provider as part of our decision-making on voting and engagement themes and priorities.  Separately, our provider engages with individual companies as part of the process leading to the production of proxy voting analysis and voting recommendations.


LEA 03. Process for identifying and prioritising engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.

03.1. Indicate whether your organisation has a formal process for identifying and prioritising engagements.

Indicate the criteria used to identify and prioritise engagements for each type of engagement.
Type of engagement
Criteria used to identify/prioritise engagements
Individual / Internal staff engagements

Individual / Internal staff engagements

Collaborative engagements

Collaborative engagements

Service-provider engagements

Service-provider engagements

03.3. Additional information. [Optional]

We recognise the need for a more systematic approach which takes account of the materiality, scale and ramifications of ESG issues and the development of a more formal process for identifying material issues and prioritising them for targeted engagement is underway.  This will be based on ESG heat mapping focussed initially on the listed equities portfolio. Our approach will utilise proprietary ESG data (company level) and also consider broader frameworks which can assist our thinking about thematic and sectoral signalling.  For example, we are currently reviewing how the Sustainability Accounting Standards Board approaches and defines materiality. 

One of the outcomes of a review of engagement challenges (undertaken in 2019) has been the decision to appoint an external provider of engagement services for our listed equity and fixed income portfolios.  Our specification for services identified the importance of an experienced provider well setup to partner and collaborate with our in-house team.  A procurement process  (using the LGPS framework for Stewardship Services) has concluded successfully and services are due to begin in Q1 2020. 

 


LEA 04. Objectives for engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.
Indicate whether you define specific objectives for your organisation’s engagement activities.
Individual / Internal staff engagements
Collaborative engagements
Service-provider engagements

04.2. Additional information. [Optional]

Some of our external managers have also defined specific objectives and report to us on progress towards them.

 


LEA 05. Process for identifying and prioritising collaborative engagement

Indicate whether you monitor and/or review engagement outcomes.
Individual / Internal staff engagements
Collaborative engagements
Service-provider engagements
Indicate whether you do any of the following to monitor and/or review the progress of engagement activities.
Individual / Internal staff engagements
Collaborative engagements
Service-provider engagements

05.3. Additional information. [Optional]

As noted elsewhere, we consider shareholder voting part of engagement and also work directly with delgate managers on some themes and issues. Where these have defined timelines and objectives we monitor progress. 


LEA 06. Role in engagement process

06.1. Indicate whether your organisation has an escalation strategy when engagements are unsuccessful.

06.2. Indicate the escalation strategies used at your organisation following unsuccessful engagements.

06.3. Additional information. [Optional]

LPPI does not have a formal escalation policy (a protocol based on detailed scenarios and corresponding actions in response). A lack of progress in an engagement will be addressed by the approach best suited to the circumstances. This might mean collaboration with other investors, shareholder voting (or other AGM focussed actions) or, where we are unconvinced by management's response, potentially in the sale of stock held by the internally managed portfolio.
 


LEA 07. Share insights from engagements with internal/external managers

07.1. Indicate whether insights gained from your organisation`s engagements are shared with investment decision-makers.

Type of engagement

Insights shared

Individual / Internal staff engagements

Collaborative engagements

Service-provider engagements

07.2. Indicate the practices used to ensure that information and insights gained through engagements are shared with investment decision-makers.

07.3. Indicate whether insights gained from your organisation’s engagements are shared with your clients/beneficiaries.

Type of engagement

Insights shared

Individual/Internal staff engagements

Collaborative engagements

Service-provider engagements

07.4. Additional information. [Optional]


LEA 08. Tracking number of engagements

08.1. Indicate whether you track the number of your engagement activities.

Type of engagement
Tracking engagements
Individual/Internal staff engagements​

Collaborative engagements

Service-provider engagements

08.2. Additional information. [Optional]

For the portfolio as a whole, LPPI does not systematically track the number of engagements being participated in.

Our Stewardship Committee receives a log of engagements undertaken by our internal team on a quarterly basis

On an annual basis we ask our delegate managers (listed equities) for information on their stewardship and engagement activities during the year. This includes providing information on the focus and incidence of their engagement activity.

 


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