Tax, cyber security and climate among priorities for £29bn UK pension pool

Brunel Pension Partnership unveils its first RI policy

Brunel Pension Partnership, the new £29bn investment pool of ten UK local government pension scheme (LGPS) funds, has said it will engage with companies on tax transparency, cyber security and climate change, as it releases it its first responsible investment policy today.
The nine-page document says responsible investment is central to how Brunel fulfils its fiduciary duty and outlines a three-pronged approach of integration, collaboration and transparency.
‘Integration’ includes active engagement, and the policy outlines priority themes that Brunel will focus on, including tax transparency.
The policy says while tax is complex, it is also the way corporations contribute to the economies in which they operate. “We believe there is the potential for financial consequences for companies whose tax practices are deemed inappropriate by policymakers, regulators and wider society,” it says. 
Brunel will publish its own approach to tax transparency and engage with companies to disclose their approach.
The pool also lists climate change as a priority theme and pledges to disclose in line with the Taskforce on Climate-related Financial Disclosure. Its policy says it does not support “complete divestment” in relation to climate change, but is committed to decarbonisation, carbon footprinting and low-carbon strategies.
Last week, RI revealed that Brunel’s first mandate – up to £4bn in passive equities awarded to Legal & General Investment Management – includes a low-carbon option.
Brunel is a member of the Institutional Investor Group on Climate Change, PRI and the Transition Pathway Initiative.Other priority areas include asset manager costs transparency, human capital and diversity, cyber security and supply chain management, it said.
Brunel’s responsible investment policy also says a priority is supporting the UK policy framework around sustainability, including the UK Corporate Governance and Stewardship Code, the Green Finance Initiative and the Global Social Impact Investment Steering Group. 
The UN Sustainable Development Goals are also a focus, with a commitment to map investments to the SDGs and engage with companies to evaluate their ‘fitness for the future’, through benchmarks such as Future Fit.
Brunel will report quarterly on its engagement activity and develop a single voting policy on behalf of its LGPS clients, reporting at least twice a year. It plans to appoint an engagement and voting service provider.
Faith Ward, Chief Responsible Investment Officer at Brunel Pension Partnership, said: “Brunel aims to deliver stronger investment returns over the long term, protecting our clients’ interests through contributing to a more sustainable and resilient financial system, which supports sustainable economic growth and a thriving society.”
Brunel is one of eight investment pools being established under new UK government rules to ‘pool’ the £259bn in assets of 89 local government pension scheme funds in England and Wales. Now that it has selected a passive equities manager, it is on the hunt for an active equity manager for a £1.2bn mandate, and a manager for £600m of global low-volatility equities.
For more on the new pension pools’ plans to integrate ESG, see RI’s recent analysis, here.