Head Office Press Office
- 20-Jul-2007 - Confidence that environmentally-friendly
investments can be made whilst maintaining
the best risk/reward ratio has resulted
in the Environment Agency appointing Royal
London Asset Management
to its stable of specialist fund managers,
increasing to 11 the team responsible for
managing the environment watchdog’s £1.5
billion pension fund.
Royal London Asset Management will manage
£55 million of the Environment Agency’s
Active Pension Fund assets on behalf of
its 19,000 members, with a mandate to invest
in UK non-gilt fixed income bonds.
The award of the new mandate will not impact
on any of the existing fund managers, which
include Hermes, Standard Life Investments,
European Credit Management, Capital International,
Scottish Widows, Informed Portfolio Management,
State Street Global Advisors, Sarasin Chiswell,
Morley Fund Management and Robeco.
"The Environment Agency’s Active Pension
Fund, with a market value of £1.5bn,
is in the top 20 of the Local Government
Pension Scheme" explained Howard Pearce,
Environment Agency Head of Environmental
Finance and Pension Fund Management.
"We aim to be the public sector leader
in financially robust and environmentally
responsible investment and pension fund
management. RLAM was appointed following
a very rigorous selection process. We believe
they possess the necessary investment processes
and track record to deliver our demanding
financial performance targets and our responsible
investment requirements."
The Environment Agency was advised by Mercer
Investment Consulting, Rathbone Greenbank
and B-finance. The pension fund’s legal
adviser is Osborne Clarke and its consulting
actuary is Hymans Robertson. RLAM will be
assisted by EIRiS in implementing the Fund's
Environmental Overlay and Corporate Governance
strategies.
The Environment Agency Active Pension Fund
adheres to the UN Principles of Responsible
Investment, and is a member of the UK Social
Investment Forum, Institutional Investors
Group on Climate Change, and Carbon Disclosure
Project. The EA also supports the environmental
reporting campaign of the Local Authority
Pension Fund Forum.
"Royal London Asset Management has
been awarded a three-year investment management
agreement, which is extendable subject to
satisfactory performance. It has been set
a +1% out-performance target against the
iBoxx Sterling Non-Gilt All Maturities Bond
Index." continued Howard.
"Their performance will also be evaluated
in relation to their delivery of the Active
Pension Fund environmental overlay strategy.
This includes their integration of environmental
considerations into risk management and
security selection and referral of any environmental
resolutions to the Environment Agency.
"Their relative performance will also
be benchmarked using corporate governance
and socially responsible investment indices
and environmental reporting tools. Under
the Local Government Pension Scheme investment
regulations, the contract can be terminated
if performance is below that needed."
Its commitment to environmentally-friendly
investment, whilst maintaining the best
risk/reward ratio, has already gained it
the recognition of its peers and several
national and international awards, including
the 2007 Engaged Investors Best Scheme Governance
(Public Sector), 2006 City of London Corporation
and UK Social Investment Forum Liveable
City Award and the 2006 Global Money Management
Public Pension Fund of the Year Award.
"Our investor involvement goes beyond
pension fund management and asset allocation.
All our private equity fund managers have
signed up to Responsible Entrepreneurial
Guidelines, environmental questionnaires
are used across our entire property portfolio,
we carry out research on corporate reporting,
carbon management and green funds, and we
aim to vote directly on all environmental
resolutions, mostly in the US," concluded
Howard.
