Australia’s Local Govt Super fund awards mandate to new Hermes ESG quant fund

Super fund continues roll out of ESG across asset classes.

Australia’s AUD$6.5bn Local Government Super (LGS) pension fund has appointed Hermes Fund Managers, the wholly-owned fund manager of the UK’s BT Pension Scheme, to an AUS$90m (€73m) mandate for a new global quantitative equities Environmental, Social & Governance (ESG) strategy. Hermes said the new quant fund has an active exposure to global equities, whilst specifically incorporating client stipulated ESG factors. LGS does not invest in companies which exhibit high ESG risk, or who derive significant revenue from armaments, logging, nuclear energy, gambling and tobacco. Peter Lambert, Chief Executive Officer of LGS, said: “This is another step towards LGS developing and implementing innovative strategies that manage or mitigate our ESG risk exposure across all asset classes, while capitalising on investment opportunities to achieve solid returns for our members.”
The Hermes quant ESG strategy combines the manager’s existing quantitative equities process with its proprietary ESG Dashboard on investment risk analysis and global ESG standards based on research from Hermes Equity Ownership Services.LGS manages retirement savings for current and former local government employees across the state of New South Wales. It has approximately $3.3bn invested in responsible investment strategies across Australian shares, international shares, bonds property, and absolute return and private equity asset classes.
LGS is a signatory to the United Nations Principles of Responsible Investment and a member of the Investor Group on Climate Change, Australian Council of Superannuation Investors, the Responsible Investment Association of Australasia and the Global Real Estate Sustainability Benchmark. LGS is also a shareholder in Australian ESG research and engagement firm Regnan.
Ian Manton-Hall, Director of Hermes Fund Managers in Australia, said: “We are delighted to work with LGS on this mandate as they have shown themselves to be an industry leader in the field of sustainable investment, which resonates well with the values of Hermes and our parent, the British Telecom Pension Scheme.”