Border to Coast – Interview


include social property, infrastructure, social bonds, renewables and thinking about growth in private equity and pri- vate debt. In our view, if you want to get a decent amount of assets invested in the UK, it is better to take a holistic view of putting capital to work – it’s about diversification and reasonable return. We anticipate we’ll end up working with around eight to 10 partners in targeting good returns but also capturing wider metrics – local employment, apprenticeships, residential units built, local infrastructure delivered, and so on.


What new investment approaches you are looking at and why? For UK Opportunities, we want to make sure there are good regional opportuni- ties – and we’re not going into this with a fixed percentage regionally or in certain council boroughs. That is not the way to build a well balance portfolio. We are going to work with a select group of specialist managers to consider all appropriate opportunities. Some will hopefully come through a bottom-up assessment approach, from our partner funds and elsewhere. Social housing is an area we are looking to invest in. But we want to make sure there are good discernible metrics about how we are making a difference. In some cases that could be employment, in others it could be the green agenda and captur- ing those metrics. We want to be open to idea generation from managers and look at things on a level playing field basis, with no structural bias to begin with.


The criticism is that there is frequently a lack of such opportunities to invest in. There can be, but that is why a diversified approach is better. We will look for a strong economic return as our principal driver for investing. It will not make us feel good if we are investing in something that will not make us money just because


We want access to people in the market with interesting insights and with a different picture of the world.


it is a social good. It has to meet the investment returns required by our part- ner funds.


You launched a new programme of engagement on the just transition: what does this involve and why is it important? Just transition is the integration of the social dimension into climate strategies, including mitigating social risks. For us, engagement is part of our invest- ment approach, and it’s about how you get the best investment returns from your portfolio. A just transition is good at making you think through the impli- cations of the energy transition. So, for example, we want to make sure banks make the right decisions and under- stand any social impact or impact on their stakeholders. We work with a range of organisations on this, such as The Grantham


Institute at the London


School of Economics. We are also focused on initiatives that we feel are important ESG themes. For example, we partner with Rathbones on modern slavery. There were 12 compa- nies identified as failing on modern slavery. We have engaged on that, and they have adjusted their policies; this


What are you focused on going forward? We’ve built the largest asset manager out- side of London and Edinburgh, and we have an exciting future. My focus will continue to develop, support and evolve the team to ensure that, as a centre of investment expertise, we can support our partner funds.


Issue 126 | September 2023 | portfolio institutional | 15


shows engagement works and can drive real change. We have also been engaging with oil companies more directly. We tell them in advance that we will vote against them unless they instigate change. We have a well-resourced responsible investment team that is fully integrated into our investment process – and ESG and managing the risks and opportuni- ties climate transition brings is fully embedded in that.


Data is an issue every investor cites as a problem within the ESG narrative, so how can that be addressed?


Data is a real challenge. The simple reality is that larger firms are better positioned with resources to provide data, but smaller cap firms aren’t. This is something we need to change. I’ve seen initiatives where companies receive a discount on debt pricing if they provide more ESG data. But the simple truth is that all companies need to recognise that there is an upside for them if they engage.


So engagement is the best way to move the dial? Yes. If you disinvest, you are out of the game. Why would a company listen to someone who doesn’t own their stock? De-investment can create an initial big splash, but the splash dies away and you are no longer a factor for management – but you still remain exposed to the real world risks of climate change. For us, driving change in the real world is the best way to manage the risk of climate change, and engagement is fundamen- tal to this.


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