Local Government Super first entered responsible investing in 1999. It recognises that the long-term prosperity of the economy and the wellbeing of members depends on a healthy environment, social cohesion and good governance of the companies in which it invests.
LGS started screening tobacco in 2001. Screening has been developed over time and now covers Controversial weapons, Tobacco, Armaments, Gambling, Old growth logging, Uranium mining/nuclear, High ESG risk profile and "High carbon sensitive" companies. The current investment restrictions list is generated internally by LGS using data obtained from MSCI ESG Research and in consultation with one of our fund managers, Hermes Investment Management. The main list is generated on an annual basis, with reviews of specific companies and review of the overall policy undertaken throughout the year. It currently covers the MSCI Australia IMI and MSCI ACWI universes. The restrictions list is issued to all relevant fund managers across listed equities and fixed income for immediate implementation and monitored by the LGS Investments Team, Operations and the LGS custodian through their monthly compliance reporting mechanism. We currently screen 272 companies across 29 countries.
As a result of revising the Policy in 2010 and establishing a commitment to allocating funds to positive investments, LGS engaged its first thematics manager in international listed equities. This mandate is managed externally and focuses specifically on environmental products and services.
With increasing awareness about the benefits of ESG integration (i.e. more holistic risk management, with potentially more value to be gained), LGS actively engaged its first ESG focused manager in international listed equities in 2012. ESG integration capabilities are now routinely assessed as part of the selection/due diligence process for all new managers. ESG incorporation is well developed across all of our listed equity mandates. We have developed proprietary methodology to rank all our managers and align ESG integration with performance. On a regular basis we report ESG quality and carbon emissions on our website.