West Midlands Pension Fund taps five fund managers for £1bn LGPS sustainable equity framework

The £16bn (€18.7bn) West Midlands Pension Fund says it is launching a Sustainable Equity Framework with five investment managers that will be available to all members of the LGPS Central pool of which it is a member.

The five managers are Canada’s AGF and RBC Global Asset Management and Baillie Gifford, Impax and WHEB Asset Management of the UK. The manager search was assisted by consulting firm Redington and LGPS Central and pool members Cheshire, Derbyshire and Worcestershire.

The new framework is accessible to all nine members of the LGPS Central Pool, with total awards of £1bn across partner funds expected in the first year.

West Midlands said the allocation “reflects a broader strategic belief that effective engagement and management of financially material environmental, social and governance risks, enhances returns over the long term”.

Michael Marshall, Director of Responsible Investment & Engagement at LGPS Central, said it was the largest allocation to actively managed sustainable equities ever in the UK.

For WHEB AM, whose Managing Partner George Latham and Head of Research Seb Beloe were the nucleus of the old SRI team at Henderson Global Investors, the appointment represents its first institutional separate account mandate.The mandate is expected to be managed using the same strategy as the existing FP WHEB Sustainability Fund and the Pengana WHEB Sustainable Impact Fund.

Latham said: “The WHEB team developed a solutions-focused strategy for sustainable investing well over a decade ago. This approach is increasingly being recognised for its ability to play an important role as part of the suite of measures to deliver investment strategies.”

“The largest allocation to actively managed sustainable equities ever in the UK.”

Jill Davys, Assistant Director – Investments and Finance at West Midlands, said: “WHEB’s investment strategy integrates sustainability and the opportunities from the transition to a low carbon and more sustainable economy at its core. West Midlands Pension Fund’s objective is to align our investment strategy for long term sustainable returns and we are therefore delighted to appoint WHEB for this global sustainable equity mandate.”

Earlier this month, RI reported that LGPS Central member Worcestershire had considered the “worst case scenario” option of leaving the pool in a row over budget issues amid less-than-forecast cost savings.