The principles of responsible investing aim to incorporate the following factors in investment decisions:
These factors are known as ‘ESG factors’. They help to better manage risk, and generate sustainable, long term return.
The Derbyshire approach to responsible investment
Derbyshire County Council’s Pensions and Investments Committee believes that responsible investment covers both incorporating ESG factors into the investment process and fund stewardship and governance through considered voting and engagement with investee companies.
Effective management of financially material ESG risks should support the requirement to protect investment returns over the long term. Non-financial factors may be considered to the extent that they are not detrimental to the investment return.
The committee supports a strategy of engagement with companies to influence behaviour and enhance value, rather than negative screening to exclude stocks from the portfolio on ESG and ethical grounds.
Climate Related-Financial Disclosures
Our Pensions and Investments Committee recognises that material climate change risks and opportunities could be experienced across the whole of the fund’s investment portfolio, and that climate change is also likely to impact the fund’s liabilities.
See our Climate-Related Financial Disclosures page in the policies, strategies and statements section of this website for more information.
Local Authority Pension Fund Forum (LAPFF)
Membership of the Local Authority Pension Fund Forum (LAPFF) helps the fund to engage with companies to understand relevant issues and to promote best practice. Collective pressure from investors via organisations such as the LAPFF has helped to encourage listed companies to enhance their corporate governance and to improve their environmental and social impacts.
The fund attaches great importance to the exercise of voting rights and currently casts votes in respect of its directly held equity investments in the United Kingdom and North America. The fund’s voting policy is set by the committee.
A report setting out the stewardship activity of the fund’s largest investment managers is reported on a quarterly basis to the committee. Previous voting reports are available in the committee’s minutes on the Derbyshire County Council website.
LGPS central pool
Following the launch of the LGPS central pool, an increasing portion of the fund’s investments will be transitioned into products managed by LGPS Central Limited. The company has developed a Responsible Investment and Engagement Framework which is attached to this page. It incorporates the responsible investment beliefs of the pension funds within the LGPS central pool which will be applied to both internally and externally managed investments.
Links to useful documents