How is the pension scheme for the coal industry investing responsibly? Callum Logan: We have a range of priorities. Foremost is engag- ing with our external managers and holding them to account. It is fundamental to make sure all our managers consider ESG factors when they invest. That means challenging them on any controversial companies they own. Like many schemes – and perhaps surprising to some given our background – climate change is a key focus for us. It is financially material. We are addressing it from a perspective of opportunities, where we see it driving markets in the decades to come and want to be positioned for that, as well as consider- ing the risks. That includes transition and physical risk, whether it is stranded assets or properties being flooded.


Coal is an old source of energy, so do you invest in new sources of energy? Logan: We own physical infrastructure assets in wind and solar. We also have a public equity strategy that focuses on the energy transition.


What are Railpen’s responsible investment priorities? Chandra Gopinathan: Responsible or sustainable investing is about active and universal ownership. So active investment and active engagement with companies, policymakers, regula- tors and peers. We have a thematic approach to responsible investing. Individ- ual themes range from climate change, where we support the transition in various ways, to workforce disclosure and issues, such as modern slavery. Other themes include responsible technology and sustainable financial markets. Our approach spans the E, S and the G. A lot of these themes have a clear governance agenda, while two include social fac- tors and climate change is, of course, primarily environmental and social.


USS is a large scheme. Does that make it difficult to invest responsibly across all your portfolios? Robert Campbell: ESG is important in every asset class, even in private markets where data is sometimes not great. For us, net zero is front and centre. Human rights are also important. We are increasingly seeing it as an investment risk. Some Chinese companies, for example, have de-listed in the United States due to alleged human rights abuses. Alongside that, biodiversity might not be a focus at the moment, but it will probably be the next cab off the rank. We are looking at the proposals for the Taskforce on Nature-related Financial Disclosures (TNFD) and are encouraged that they mirror the Task Force on Climate-related Financial Disclosures (TCFD), which is a good framework.


8 October 2022 portfolio institutional roundtable: Responsible investing


Definitions can be quite a dry conversation, but they are important because they define


outcomes. Lloyd McAllister, Newton Investment Management


Jacqueline, what does responsible investment mean to London CIV?


Jacqueline Jackson: It is not only about responsible investing, but also investing for sustainability. To decide which steward- ship themes we want to prioritise, we take a five-step approach. First of all, we think top-down to identify global drivers includ- ing macro risks, policy and regulation as well as stakeholder priorities. Secondly, we consider bottom-up impacts, assessing company drivers unique to London CIV, including asset specific risk cli- ent priorities, our holdings and investments as well as where we can have influence. Thirdly, recognising social materiality in terms of which issues will have the biggest impact on the world around us. Fourthly, calculating financial materiality in terms of which issues will have the biggest impact on our returns and finally, responding to unforeseen events after a specific and significant incident.


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