London CIV – ESG interview


So far, we have convened an internal working group which is comprised of a representative from each department within London CIV. Then in early Febru- ary, the responsible investment team will hold a climate stocktake workshop to con- sider our progress, revise our strategy for 2023 and devise a more comprehensive roadmap that we believe will bring us closer to net zero. We will be setting more fund and sector specific targets, as well as strategies that correspond to achieving our interim targets.


There has been a wave of downgrades of Article 9 funds. Is that a concern for you as an investor?


respond to consultations, or lead investee company engagements.


Clients can utilise our statements, co-sign consultations or follow our lead where they agree. However, of course, the less pooled the asset is, the lower our influence and more restricted our knowledge will be on what is contained in that fund. That means impact and relevance is at its highest with pooled funds but that is not to say we do not sup- port engagement and climate data analyt- ics where clients request it.


So, if Lambeth or Camden decided to invest in a coal mine outside of their pooled assets, you might be able to speak to them about it but ultimately it would be their decision? Given Camden’s leadership in responsi- ble investment and Lambeth’s 2040 net- zero target, I’d be a little surprised if they clamber to invest in a new coal mine, but yes, it would be their decision. Our clients are solely responsible for their strategic asset allocation (SAA) and investment strategies.


What we can do, is help them to under-


stand the climate risk impact of a fund, quantify that for them against the alterna- tives, we could even show how SAA can influence the temperature of a fund or help them understand where to prioritise engagement should they still decide to invest. Let’s say there might be an investment in companies present in various funds, through different client investments, pooled and off pooled. If we had an engagement with a specific investee company on a certain topic, and the client wanted to support that engage- ment, we could add their investment exposure to the conversation, demonstrat- ing the stake in the game we have collec- tively. It strengthens our voice when we can


highlight partnership.


London CIV has a target of being net zero by 2040 and operationally net zero by 2025. How is that going? It is going well, thank you. We set the tar- get at the end of 2021 and we have since been working on our operational net-zero target.


higher exposure in


I am in two minds about this. It has been significant with about 1,500 funds catego- rised as Article 9 at risk of having that status removed because they were not investing solely in sustainable invest- ments, or if they were, they were not pro- viding the transparency of data needed to confirm that.


It will be interesting to see how that goes. Will Article 9 funds tighten up their own investment criteria or will they just re-classify as Article 8?


Both approaches are fine and in some cases it is possible to allow funds to launch with Article 9 as the goal yet iden- tify as Article 8 until outstanding ques- tions are clarified. In some instances, it is better if managers have downgraded or a fund is re-classified, which in some instances could be in the best interest of shareholders.


It is sometimes better to have the right momentum in terms of greening funds instead of assuming that everything is already in place.


There is nothing wrong with investing in funds where you have influence to improve its ESG credentials. That is the point of an activist owner, who has the opportunity to influence change through targeted, effective and focussed engagement.


Issue 120 | February 2023 | portfolio institutional | 25


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