Lewisham Pension Fund has updated its investment strategy, incorporating feedback from a member survey and aligning with new regulatory requirements for investment pooling.
The Pensions Investment Committee (PIC) met on Tuesday, March 17, 2026, to approve revisions to the Fund's Responsible Investment Beliefs, Engagement Policy, and Carbon Transition to Net Zero Policy. These updates follow a member survey conducted between October and December 2025, which garnered 1,015 responses, representing approximately 3.5% of the Fund's membership. The survey, which comprised 22 questions across four sections, aimed to understand member views on responsible investment, engagement with investment managers, and specific ESG priorities. The analysis highlighted that while members generally align with the Fund's existing policies, they expect the committee to monitor and engage with investment managers on a wide range of ESG issues. Key themes emerging from the open-ended comments included climate change, human rights, ethical investing, and concerns regarding occupied territories. Members generally ranked all environmental, social, and governance factors as important, with a slight emphasis on 'paying a living wage' within social factors and a general view that 'all governance factors are equally important'.
The Fit for the Future
regulations require all Local Government Pension Scheme (LGPS) funds to pool their investments by 31 March 2026. This necessitates the Lewisham Pension Fund transitioning its investment arrangements into the London Collective Investment Vehicle (LCIV). From April 1, 2026, the LCIV will assume primary responsibility for managing and monitoring all of the Fund's assets. While the PIC will retain strategic oversight and fiduciary responsibilities, the LCIV will be instrumental in delivering the Fund's responsible investment and climate objectives. The updated policies reflect this shift, with clearer expectations for the LCIV regarding ESG integration, stewardship, and transparent reporting.
The Investment Strategy Statement aims to achieve a benchmark return in excess of the discount rate of 5.3% per annum. The responsible investment approach is designed to balance this with ESG considerations by integrating these factors into investment decision-making, expecting investment managers (LCIV) to do the same, and monitoring their activities. The updated Responsible Investment Beliefs state that Responsible Investment issues (including Environmental, Social and Governance factors, and particularly climate risk) can have a material impact on the long-term performance of the Fund's investments and the Fund's reputation. Members expect the Committee to consider a wide range of ESG factors in its decision-making processes.
Furthermore, the belief that the sustainability of investment returns over the long-term... is important
indicates a commitment to balancing financial returns with ESG considerations.
As part of the updated Investment Strategy Statement (ISS), the Fund will target an allocation of 1-3% of total assets towards local investments. The ISS defines 'local investment' as capital deployed within Lewisham and surrounding administering authorities, alongside the wider LCIV catchment area. These investments will be made in partnership with LCIV, which will be responsible for due diligence and monitoring. The Fund will report on its local investments, particularly their positive impacts on the community, in subsequent updates to the ISS. This initiative aligns with the government's Fit for the Future
agenda and aims to support sustainable economic development within the LCIV pooling area.
Revisions to the Responsible Investment Beliefs include a strengthened stance on screening and exclusions. The updated beliefs now state that The Fund and its members expects LCIV to screen and monitor companies with significant revenue from tobacco, pornography and gambling. We recognise that Investments in these areas could contribute to negative social effects that can present financial risks, and therefore, we expect LCIV to report on and justify such holdings, and alongside their engagement efforts on social risks.
The approach to divestment has also been clarified, stating that it can be considered as a mechanism for managing ESG risks when engagement proves ineffective.
The Engagement Policy has been updated to more clearly link engagement activity with the Fund's Climate Transition to Net Zero Policy, emphasizing the use of engagement as a strategic tool to support decarbonisation and improve ESG standards across the portfolio. The updated Climate Transition and Net Zero Policy outlines refined interim targets for reducing the Fund's financed emissions, including a goal to reduce listed equity emissions by 90% by 2030 and Scope 3 emissions by 50% by the same year. The Fund expects LCIV to play an increasing role in developing sustainable investment products that align with its decarbonisation strategy. Specific engagement strategies include engaging with LCIV regarding existing investments and the development of future solutions; engaging with the top 10 most misaligned companies in heavy emitting sectors; engaging to improve data availability and quality for all asset classes by 2028; and engaging annually with LCIV on existing investments and participating in Seed Investor Groups for relevant sustainability mandates. The policy also highlights engagement on deforestation, biodiversity loss, social factors, and climate adaptation, with consideration for collective action.
The PIC also noted the progress made in the transition to investment pooling with the LCIV. The committee is asked to approve the entering into of an Investment Management Agreement (IMA), which will formalise the transfer of investment management responsibilities to the LCIV by April 2026. The formal legal due diligence of the IMA has been concluded, and the agreement is presented for approval. The IMA and associated Schedules are provided in Part Two of the meeting papers.
The Fund will monitor LCIV's activity related to the Net Zero Policy and assess the effectiveness of their implementation of the transition to Net Zero carbon in the Fund's investments. The updated Climate Transition and Net Zero Policy commits to annual climate metrics reporting, using TCFD (or its regulatory successor) as the primary reporting framework. Specific targets include reducing listed equity emissions by 90% by 2030 and Scope 3 emissions by 50% by 2030, and measuring Scope 1, 2, 3, and 4 emissions across all asset classes by 2028. The Fund also expects LCIV to provide clear reporting on ESG matters, particularly climate metrics. The Engagement Policy also outlines an outcomes-based approach with 'Satisfied', 'Monitor', 'Follow up', and 'Escalate' outcomes to track progress.
For more details on the meeting and the updated policies, refer to the Public reports pack for the Pensions Investment Committee meeting on March 17, 2026.
