Investment Manager Monitoring

Recognising the fiduciary duty to act in the long-term interests of its shareholders, London CIV has implemented a rigorous screening process for selecting and appointing investment managers to ensure that climate change considerations are incorporated within financial decision-making.

Managing risks associated with climate change is a fundamental part of our investment strategy. As a result, they have been integrated into all stages of our engagement with investment managers. This approach was established with the oversight of the London CIV Compliance, Audit, and Risk Committee, and the Investment Oversight Committee. 

All tendering investment managers must be able to clearly demonstrate their approach to identifying and mitigating exposure to climate risk and articulate how their investment objectives support the transition to the low carbon economy. This is assessed by the fund’s ESG and Climate Policy and its responses to London CIV’s investment manager due diligence questionnaire. 

However, while climate stewardship is an essential part of our manager selection process, London CIV does not currently stipulate specific investment strategies or minimum levels of ESG or climate integration. This is left at the full discretion of investment managers, which enables them to tender with optimal strategies, contingent upon the nature and requirements of the fund mandate as defined by London CIV.

We then meet with our investment managers on a quarterly basis to assess their climate performance across key exposure and impact metrics. Investment managers are challenged to provide case studies or examples of investment decisions that were influenced by the integration of climate factors in decision-making.  

No climate performance targets, or risk exposure thresholds have currently been set by the London CIV. However, we do seek to ensure that our funds’ climate profiles are improving over time. Specific emission reduction targets may be determined on a case-by-case basis in future iterations of the climate policy. 

Example of a due diligence questionnaire used at selection stage to assess manager ESG competence prior to appointment. Source: London CIV

© London CIV 2021
London LGPS CIV Limited is a private limited company, registered in England and Wales, registered number 9136445. Registered office 4th Floor, 22 Lavington Street, London, SE1 0NZ. Authorised and Regulated by the Financial Conduct Authority number 710618.

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