Interview – Brunel Pension Partnership


large charities. I then gravitated towards running money with a purpose, so there was that push.


I also wanted to go somewhere with an asset owner mentality, removing the com- mercial pressures and allowing me to focus on the parts of the job I love, which are managing teams and running money.


George Osborne created the pension scheme pools to invest in infrastructure and reduce costs. Have these been borne out from Brunel’s perspective? On reducing costs, I can say 100% yes. We are up to £24m a year in gross sav- ings. That was based on us being at a lower transition point at time of calcula- tion – we are now more than 80% transi- tioned – so those savings will move upwards.


It is not rocket science. What I can do negotiating with £40bn [to invest] versus an individual £3bn is huge. You get a bet- ter fee bargain and the savings on econo- mies of scale are significant.


On the infrastructure part, we have hired a former head of Big Society Capital to lead that team. So someone like myself: a hands-on investor who has come through the process. And importantly, we are a bigger team than the internal teams would have been historically.


And so, in our infrastructure portfolio, we are invested in greener bus services that make special provision for under-served/ low-income users – that’s our social prior- ities. And in our Secured Income portfo- lio, we are invested in harvesting rainwa- ter for resource efficiency, and boosting biodiversity, at a biomass industrial plant – our climate and biodiversity priorities. Brunel’s reputation has also been benefi- cial. People everywhere want to work with Brunel. So we do not just hand out a man- date, we try to make it as much of a part- nership as we can.


Looking back, were these good measures that Osborne identified?


They were not enough. What they focused 14 | portfolio institutional | October 2022 | Issue 117


We do not just hand out a mandate, we try to make it as much of a partnership as we can.


on were the tangibles. But cost is only one part of the equation. Value for money is the rest. There are other parts, such as producing the right performance out- comes and building strong relationships.


Brunel has a long-term perspective on ESG. How would you sum up your ESG and net-zero approach, given some of the chal- lenges on this front? Responsible investment is integral to eve- rything we do. One of our founders along with the previous chief executive and head of investment came from the Envi- ronment Agency. Responsible investment runs through Brunel like a stick of Brighton rock. But we are also pragmatic. We have been clear that we will not make investments just to make us look better. We want to reduce the carbon intensity of our portfo- lios over time. We have been doing it since day dot, but we do not want to have a portfolio that has no carbon footprint in it. We want to make a real world impact. There is no point changing our £40bn [exposed to net zero] and thinking that the job is done. It is not. You need to make difficult choices. You need to embrace the real economy. You need to find compa-


nies that are profitable while on the jour- ney to decarbonisation. So supporting companies which have a credible plan through the transition is important. Do not crowd into companies that avoid the issue. We invest in companies in the industrial space, which are carbon inten- sive but have a credible plan to decarbon- ise, while their products allow others to do the same. So it is about being pragmatic.


It is also not just looking at sustainable analytical scores. It is about combining all the major qualitative views and then speaking with the company. There are, in my view, huge problems with data. It is backward looking; it does not tell you the full story. It shows you a snapshot in time and does not show you where a company is going. So you cannot rely on one dataset.


You have been allocating £8bn across pri- vate equity, debt, infrastructure and secured income mandates in the third cycle. What is the approach here? The asset allocation is set by our clients and every two years in the private market sphere we have a new franchise. We have just gone into the third cycle, having been told how much [the members] want to commit and we scope the products together. So the members have been driv- ing the allocation. But as our credibility in the eyes of our cli- ents has improved, our shaping of invest- ment products has grown. That has been a slight evolution in the journey and now we are past core funds to a bespoke and local approach.


That seems an interesting adjustment for the pool model. Where has this come from? A client’s desire to meet an objective. Some, for example, want investments with a local flavour. This happened in Cornwall. The local government scheme there highlighted the local investments they wanted to make and we looked at what was available.


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