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Impact Investing

IPE special report May 2018

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Environment Agency tenders €658m (updated)

UK – The roughly £1.3bn Environment Agency Pension Fund has put two mandates out to tender amounting to £450m (€658m).

Head of Environmental finance and pension fund management, Howard Pearce, told IPE the scheme is tendering a new £50m emerging markets equities mandate, and a new £400m currency overlay mandate.

The emerging markets mandate demands adoption of the scheme’s corporate governance and environmental overlay strategies, and seeks a +3% above benchmark investment return.

Meanwhile, the currency overlay mandate consists of 60% passive hedged and 40% actively managed.

“We are underweight in emerging markets equities versus our strategic benchmark. A currency overlay mandate is because of the value of our overseas holdings,” said Pearce.

These are the only specialist mandates the scheme has for currency overlay and emerging markets. However, its two global equity manages are permitted to invest in emerging markets if they wish to.

Pearce added that the scheme’s advertising, tendering and selection process is being managed in-house with specialist support from Mercers (general strategy and currency manager), B-Finance (emerging market manager) and Rathbone Greenbank (on emerging markets SRI issues).

Investment managers for the scheme include Standard Life Investment, Hermes Pensions Management and State Street Global Advisors.

The fund has approximately 18,000 members.

In December 2005, the Environment Agency Pension Fund won the SRI award at the annual IPE awards in Berlin.

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