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Local Pensions Partnership

PRI reporting framework 2020

You are in Strategy and Governance » Governance and human resources

Governance and human resources

SG 07. RI roles and responsibilities

07.1. Indicate the internal and/or external roles used by your organisation, and indicate for each whether they have oversight and/or implementation responsibilities for responsible investment.

Roles

Select from the below internal roles

07.2. For the roles for which you have RI oversight/accountability or implementation responsibilities, indicate how you execute these responsibilities.

LPPI Board members have ultimate oversight of Responsible Investment and its governance at LPP. This is principally executed through the Board's oversight of the investment business which involves the regular receipt of reports and papers, the review and agreement of current and new policies, and the oversight and authorisation of public reporting where this touches upon stewardship and Responsible Investment activities.

Internal roles with oversight responsibilities include the CIO (LPPI) and the CEO (LPPI and LPP Group), both of whom sit on the LPP Stewardship Committee and have a detailed involvement in the

  • design and review of RI policy and its implementation
  • agreement of objectives and priorities for senior staff
  • availability of dedicated RI resourcing to both advise and support the investment business and work directly with client pension funds. 

Through their executive roles the CIO (LPPI) and CEO (LPPI and LPP Group) are advocates for RI and stewardship being recognised as an integral part of the aims and objectives of the partnership and considered within the design and execution of routine business practices.  

Detailed oversight of Responsible Investment at LPP resides with the Head of RI (LPPI) and is executed through the objectives and priorities agreed for the role on an annual basis (as part of the performance management process) and through the incentives and rewards received for delivering against these objectives.

07.3. Indicate the number of dedicated responsible investment staff your organisation has.

4 Number

07.4. Additional information. [Optional]

LPPI has four dedicated responsible investment staff who provide advice, support and guidance to the investment business and to client pension funds. 

  • Head of Responsible Investment
  • RI Analyst
  • RI Data Analyst
  • Climate Change Analyst

The team's role includes facilitating the embedding of RI good practice across the wider investment team as part of what all investment staff do and deliver as part of their respective roles.


SG 07 CC. Climate-issues roles and responsibilities

07.5 CC. Indicate the roles in the organisation that have oversight, accountability and/or management responsibilities for climate-related issues.

Board members or trustees

Chief Executive Officer (CEO), Chief Investment Officer (CIO), Chief Risk Officer (CRO), Investment Committee

Portfolio managers

Investment analysts

Dedicated responsible investment staff

External managers or service providers

07.6 CC. For board-level roles that have climate-related issue oversight/accountability or implementation responsibilities, indicate how these responsibilities are executed.

The members of LPPI board are aware of and supportive of the priority being given to climate change as a material investment issue.

They execute their responsiblities for climate-related oversight through their approval of the key climate-related policies and disclosures that LPPI publishes.

Such disclosures include annual reporting, PRI reporting and TCFD reporting. In the process of reviewing and approving documents the Board has oversight of climate-related activites at LPPI and the information from which to form and ask questions about the approach and activities underway.

Further, the Boards of LPPI and LPP Group have identified stewardship and leadership within responsible investment as a key strategic priority within their 2020-2025 business plan.  These priorities will be monitored and reported upon within Board meetings and in shareholder interaction on an ongoing basis.

07.7 CC. For management-level roles that assess and manage climate-related issues, provide further information on the structure and processes involved.

Management-level roles assess climate-related risks through their direct involvement in investment decision-making and their oversight of the policies in place and the investment procedures in operation.

Other than where investment decisions are being made under delegated authority (for example, the addition of new stocks to the internally managed listed equities portfolio) all investment proposals are subject to a 2 stage process which involves the presentation of papers to an Investment Committee which considers and gives final approval. 

The Investment Committee consists of senior investment professionals including the CEO, CIO, Head of Private Markets, Head of Global Equities and Chief Risk Officer.

Papers presented to the Investment Committee are required to include information on any material ESG issues identified, which includes risks faced from climate change.

The Investment Committee members perform a supervisory role which includes the consideration of whether climate change related issues have been adequately considered within the investment papers presented to them.

 

 

07.8 CC. Indicate how your organisation engages external investment managers and/or service providers on the TCFD recommendations and their implementation.

Specify

          Our engagement is through a continuing focus on climate governance and through questions to managers on their approach to identifying and addressing material risks.
        

SG 08. RI in performance management, reward and/or personal development

08.1. Indicate if your organisation’s performance management, reward and/or personal development processes have a responsible investment element.

Board members/Board of trustees

08.1b. RI in personal development and/or training plan

08.2. Describe any activities undertaken during the reporting year to develop and maintain Board members’ skills and knowledge in relation to responsible investment.

The last 12 months has brought a discernible increase in the detail and scope of formal reporting by LPPI on Responsible Investment as a result of becoming a signatory to the Principles for Responsible Investment in 2018 (and reporting for the first time in March 2019) and also producing TCFD reporting for the first time.

In reviewing and approving key documents (which have included an annual RI Policy review, specific content on RI within the Annual Report and Accounts, and detailed TCFD reporting) Board members have received considerable information on RI which has been an important route for building their ongoing knowledge and sustaining an interest in this area.

Chief Executive Officer (CEO), Chief Investment Officer (CIO), Chief Operating Officer (COO), Investment Committee

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Portfolio managers

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Investment analysts

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Dedicated responsible investment staff

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

08.3. Provide any additional information on your organisation’s performance management, reward and/or personal development processes in relation to responsible investment.

The performance management process for LPPI's internal investment team encompasses general oversight of compliance with internal procedures which ensure material ESG considerations are routinely integrated into investment decision-making and RI practices are followed within everyday activities. All new staff receive induction and there is a general expectation that RI practices will be integral to procedures followed and discussions initiated day to day. 

Where investment staff are not applying RI/ESG processes appropriately this will be addressed with them and, where required, training or support needs might be met through the performance appraisal process and an appropriate target in their personal development plan.

Members of the Responsible Investment Team are set performance and development objectives directly related to the Responsible Investment objectives identified for the year. Mid year reviews and end of year preformance appraisals consider the progress made against these objectives and record and seek to reward outperformance. Reflections on prior year outcomes feed into the scoping of forward objectives for the folowing year. 

08.4. Describe the level of experience board members/trustees/chief-level staff have with incorporating ESG factors into investment decision-making processes.

          Board members are familiar with LPPI's Responsible Investment Policy and its focus on the evaluation of material ESG factors as part of identifying investment risks and opportunities which can potentially impact or enhance the long term value of client portfolios. 

LPPI Board members have relevant experience and insights to call upon including those of the Chair as a former Pension Fund CEO and PRI signatory. 

As members of LPP's Stewardship Committee, the CEO (LPPI and LPP Group) and CIO (LPPI) who chairs the committee are actively involved in the oversight of LPPI's approach to RI and strong advocates for continuing to develop and evolve capabilities in this area. They have a direct knowledge of the rationale for ESG integration and personal input into the identification of current RI objectives and the development of forward plans for evolving and extending current capabilities over time.
        

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