Smooth Transition Targeted by Britain’s Biggest LGPS Pool
Border to Coast’s new Head of Responsible Investment intends to enhance engagement efforts after year of escalating activity.
A growing focus on stewardship by Border to Coast Pensions Partnership’s responsible investment (RI) team will only become more entrenched as the local government pension scheme (LGPS) pool seeks to ensure a smooth transfer of power.
Tim Manuel was recently appointed as the scheme’s Head of Responsible Investment following the retirement of Jane Firth, joining from Aon after almost 18 years at the insurance, pensions and risk services group. He spent more than six-and-a-half years as Aon’s head of RI, leading a team of 20 to help its pension fund and other investor clients implement responsible investment strategies.
“As a long-term investor it is imperative that we invest in a responsible manner,” Manuel told ESG Investor. “I will work to ensure we embed RI principles into all we do and engage with the companies in which we invest effectively, and with impact.
“We have recently completed our first year of direct engagement, in line with our thematic priorities, and we plan to ramp-up engagement with companies as well as our involvement of industry collaborations.”
Border to Coast counts more a million members and is responsible for overseeing £52.3 billion (US$69.4 billion) of investments on behalf of 11 pooled funds. These funds are responsible for the pensions of local government employees in counties across the north of England, but also include the Surrey Pension Fund and those serving Bedfordshire and Lincolnshire.
Escalating engagement
During the last year, Border to Coast has accelerated its efforts on RI. In February, the scheme committed to further develop and embed climate and ESG risk management, include a commitment to vote in favour of shareholder resolutions aligned with the objectives of the Paris Agreement.
Published in August, Border to Coast’s annual RI and Stewardship Report outlined the first full year of its direct engagement with companies on climate.
The report showcased its votes on 13,406 resolutions at 1,052 meetings in the year to March 2024, with the LGPS setting a target for 80% of its financed emissions to be subject to engagement by 2025, and 100% by 2030.
Border to Coast engaged with companies representing 68% of the emissions covered by its net zero roadmap, having extended its activities to reach 20 more firms than last year.
According to the scheme’s latest Climate Change Report, it has reduced emissions by 58% compared to 2019 levels ahead of its interim goal of a 53% reduction by 2025. Areas considered in Border to Coast’s climate engagement include climate governance, Paris agreement strategy and alignment, Scope 3 emissions, and exposure to “climate-stressed” regions.
“Border to Coast has come a long way in the six years since it founded, and it has continued to strengthen its approach to RI every year,” said Manuel. “We further strengthened our approach to voting on oil and gas companies and have introduced exclusions on thermal coal and oil sands, as well as weapons, in our policies,” he added.
Border to Coast has also collaborated with Royal London Asset Management and Friends Provident Foundation to set clear just transition expectations for the banking sector. The LGPS’ engagement goal is for the banks to either introduce a standalone just transition plan or explicitly incorporate just transition into existing climate plans. Two banks have committed to take the requested action and a third including just transition ambitions in its net zero plan.
In May, the LGPS has launched a second £1.2 billion Climate Opportunities proposition, as part of its £16 billion private markets programme, which invests in projects and businesses that are expected to make a material contribution to decarbonising the global economy, having previously invested £1.4 billion in 2022.
The scheme is also a member of Climate Action 100+, UK Asset Owner Roundtable, the Institutional Investors Group on Climate Change’s Net Zero Engagement Initiative – where it is engagement co-lead on easyJet – and the Global Investor Commission on Mining 2030.
Manuel’s future objectives and priorities have not yet been fully set, with strategic decisions set to be confirmed in the near future.
An embedded approach
Manuel’s experience of team management will be key at Border to Coast, with one of his core responsibilities being to support the LGPS’ 70-strong investment team in integrating ESG factors into decision-making. Border to Coast’s RI team has five specialists, including a stewardship manager, a climate change manager, and analysts.
He will also oversee the firm’s investee companies and assets, as well as supporting the Border to Coast’s partner funds on ESG considerations and across areas such as Task Force on Climate-related Financial Disclosures reporting.
“Businesses that are governed well and manage ESG risks are more resilient with greater potential to provide better financial returns, so it’s vital that consideration of RI does not sit within a siloed individual team but is embedded throughout the organisation and its processes,” said Manuel.
Manuel replaces Jane Firth, who has retired after six years as Border to Coast’s head of RI and more than four decades working in the local government pension scheme sector. She had led Border to Coast’s RI team since its inception, leading on RI best practice to benefit the scheme’s partner funds.
“Jane left behind a significant legacy and a strong approach to RI that is deeply embedded into how we do things,” said Manuel.
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