Lewisham Pension Fund members have overwhelmingly backed a move towards Environmental, Social, and Governance (ESG) investment principles, according to the results of a recent member survey. The survey, which garnered 1,015 responses, indicates a strong alignment between member priorities and the fund's existing responsible investment policies. The proposed revisions aim to strengthen the fund's approach, particularly in relation to the role of the London Collective Investment Vehicle (LCIV) and to better reflect member expectations.
Members expressed a clear desire for the fund to consider ESG factors in its investment decisions, with a significant majority believing it is important for the Pensions Investment Committee (PIC) to actively engage with investment managers on these issues. While most respondents indicated that all environmental, social, and governance factors are equally important, key themes such as climate change, human rights, and good governance emerged as recurring concerns. Specifically, within social factors, 'Paying a living wage' was ranked second highest after the general sentiment that all factors were equally important. For governance factors, 'senior workers pay' was ranked as least important among the specific governance factors, while 'all factors were equally important' was the most frequently chosen response overall.
The survey results have informed proposed modest revisions to the fund's Responsible Investment Beliefs, Engagement Policy, and Carbon Transition to Net Zero Policy. These updates aim to strengthen the fund's approach to responsible investment, particularly in relation to the role of the London Collective Investment Vehicle (LCIV), which will manage all fund assets from April 2026.
The revised Responsible Investment Beliefs statement explicitly positions the LCIV as the primary mechanism for delivering the fund's responsible investment and climate objectives, with increased expectations for stewardship, voting, and engagement. The Fund expects LCIV to provide leadership in helping Funds address potential risks associated with ESG, particularly climate change, and to exercise robust stewardship of its assets, ensuring underlying legacy managers continue to deliver consistent votes on common company resolutions. The Fund will also proactively monitor LCIV's integration of ESG analysis, and voting and engagement activities, holding it accountable for its decisions. The policy also clarifies the approach to divestment, stating it can be considered when engagement is ineffective or unlikely to succeed, though practical and fiduciary constraints will still be considered prior to any disinvestment.
The updated Engagement Policy strengthens the link between engagement activity and the fund's Climate Transition to Net Zero Policy, with a greater emphasis on using engagement to support decarbonisation and improve ESG standards across the portfolio. The Carbon Transition and Net Zero Policy sets out a strengthened framework for managing climate-related risks and supporting the transition to a low-carbon economy, with clearer targets for reducing financed emissions. These updated targets include a goal to reduce Scope 1 and 2 emissions from listed equities by 90% by 2030 compared to 2019 levels, and a target to reduce Scope 3 emissions from listed assets by 50% compared to 2024 levels by 2030. Furthermore, the policy aims for full measurement of Scope 1-4 emissions across all asset classes by 2028 and maintains the ambition to reach net zero financed emissions by 2040.
Councillor Sian Eiles, Chair of the Pensions Investment Committee, stated that the survey results provide valuable insight into member priorities and reinforce the committee's approach to responsible investment. The proposed changes aim to further embed these principles while ensuring the long-term financial sustainability of the fund. Responsible investment issues, including climate risk, can have a material impact on the long-term performance of the Fund's investments and the Fund's reputation. The updated Responsible Investment Beliefs emphasize that responsible investment is compatible with securing the required investment returns to ensure the financial sustainability of the Fund. The meeting documents state that 'There are no direct financial implications arising from this report. Whilst Responsible Investment considerations can and should form part of the Committees decision making, the fiduciary duty is primary and so the implementation of the associated policies, beliefs and actions will always meet this requirement as a minimum.'
The LCIV is expected to play an increasing role in developing sustainable investment products and will be the primary mechanism for delivering the Fund's responsible investment and climate objectives. The Fund expects LCIV to provide leadership in ESG integration, robust stewardship, consistent voting, and active engagement with investee companies. The Fund will monitor LCIV more closely and hold it accountable for its decisions, requiring regular and transparent reporting on ESG activities. The LCIV is also expected to screen, monitor, and where appropriate, exclude exposure to specific issues including controversial weapons, human rights abuses, and companies with significant operations within occupied territories. The Fund also expects LCIV to screen and monitor companies with significant revenue from tobacco, pornography, and gambling, and report on and justify such holdings. Performance will be measured through regular reporting on ESG activities and engagement outcomes.
Further details on the proposed revisions can be found in the following documents: RI Beliefs Statement post member survey - track changes, Engagement policy post member survey - track changes, and Climate Transition Net Zero Policy track changes. The results of the member survey are available in Results of the Member Survey.
