Responsible Investment 

LPFA has a long-standing commitment to responsible investment (RI). Our proactive approach to addressing environmental, social and governance (ESG) issues in our investment polices has been developed over a number of years and continues to evolve.


RI Objectives, Approach and Policy

Our overall approach to RI is described within our Investment Strategy Statement which we have supplemented with a separate and complementary Policy on Climate Change

Our RI policy and priorities reflect conviction about the importance of evaluating risks and opportunities with potential to materially impact the value of our investment portfolio. This belief is embedded within the stewardship arrangements we have agreed with LPPI as our provider of advisory and investment management services.

The Fund is committed to being a long-term responsible investor and requires its Investment Manager to comply with the principles of both the UK Stewardship Code and the UN-backed Principles of Responsible Investment in the investment procedures they operate on our behalf.  

Responsible Investment is an investment approach which recognises the significance of the long-term health and stability of the market as a whole and encompasses:
  • the integration of material ESG factors within investment analysis and decision-making; and 
  • the active use of ownership rights in order to protect and enhance shareholder value over the long term – primarily through voting and engagement.
The objective of responsible investment is to decrease investor risk and improve risk-adjusted returns. Responsible investment principles are at the foundation of the Fund’s approach to stewardship and underpin the Fund's fulfilment of its fiduciary duty to scheme beneficiaries.

ESG integration and the active use of ownership influence are integral to the investment management services provided by LPPI, which are delivered in accordance with an LPPI Responsible Investment Policy. It is an LPPI RI belief that ESG factors are relevant at every stage in the investment cycle - within investment strategy, investment selection and within the stewardship of assets in ownership. As part of a prudent approach which applies care, skill and diligence, LPPI procedures ensure that ESG issues are routinely considered as part of investment analysis, are incorporated into the due diligence leading to investment selection, and continue to be monitored and reviewed as part of the active ownership of assets under management.

The approach to incorporating ESG factors is to establish the type and materiality of relevant issues on a case by case basis, whilst taking account of global norms, rather than to apply artificial exclusions through negative screening. ESG factors are considered over the time horizon within which specific investments are likely to be held, in order to clarify the context that risks and returns operate within and assist the evaluation of investment risks and opportunities.

LPFA has identified the investment risks associated with climate change as a key focus for the Fund. The Board has consequently agreed a Policy on Climate Change which sets out its approach and expectations. LPFA requires LPPI, as its delegated Investment Manager, to take steps to ensure that the level of exposure to climate change investments risks is being evaluated and managed. The Fund regularly receives information to enable the Board to monitor the progress being made in the implementation of its policy.