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How we invest

Investments

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Here you will find information on how Lothian Pension Fund is invested to make a profit which, along with the contributions paid by members and employers, will be sufficient to pay our pension benefits now and in the future.


How we invest


Investment Portfolio

Investments 


ESG Incorporation in Internal Equity Investment

The internal equity team has a comprehensive approach to integration of ESG into the investment process, more details of which can be seen in the document linked below.

Internal Equity Management ESG Integration


Responsible investment

Lothian Pension Fund has a fiduciary duty to its members and employers, set out in law, to invest for the best returns to ensure pensions can be paid when they are due.  This restricts disinvesting from companies for purely non-financial reasons.  

However, the Fund believes strongly that environmental, social and governance (ESG) issues affect the financial performance of the companies in which it invests.  It has a long history of taking these ESG issues seriously and, where appropriate, acting upon them.  In order to ensure that the Fund addresses these issues appropriately, it subscribes to third party services, which are expert in ESG issues.  It currently uses Hermes Equity Ownership Services (EOS) to assist with voting and engagement activities for the shares that the Fund holds.  It also subscribes to specialist ESG research to identify the risks and opportunities that companies face and to enhance the integration of ESG factors into the investment process. 

The Fund’s commitment to engagement with companies is also reflected in its active participation in the Local Authority Pension Fund Forum (LAPFF), which brings local authority pension schemes together in order to maximise their influence as shareholders.  The recent engagement activity of both LAPFF and Hermes EOS has involved encouraging companies to improve strategic resilience to climate change.   By engaging with companies, the Fund is able encourage responsible corporate behaviour, which is potentially more beneficial to the environment and society than divestment, which passes shares to shareholders who are less likely to challenge management strategies.  As a long-standing signatory to the Principles for Responsible Investment, the Fund is subject to annual assessment of its integration of ESG factors with the aim of acting in the long term interests of the environment and society as a whole. 

The Pensions Committee of City of Edinburgh Council regularly considers fiduciary duty and its approach to ESG issues in its investment strategy, most recently in 2016 to consider a new legal opinion on the matter and in 2015 to consider a specific request to disinvest from fossil fuel investments.  The Committee concluded on both occasions that its current approach is appropriate to deal with the risks facing the Fund.   

Further information visit http://www.lpf.org.uk/info/68/responsible_investment for current voting and engagement news.  There is also additonal information at http://www.lapfforum.org/, LAPFF and Climate Change briefing and https://www.unpri.org/


Information on UK / Scottish Infrastructure Investment

Details of UK/Scottish Infrastructure Investment


Information on Alternative Investments

Article on alternative investments
Lothian Pension Fund’s investment team has invested in alternatives for the last decade.  This article gives the Fund’s investment and legal professionals' view on this market.

February 2014



Information on How we invest