Border to Coast Pensions Partnership has reviewed its responsible investment policies to further strengthen its voting approach and outline of how it will engage to push for positive change in its portfolio companies.

As a steward of £34bn of partner funds’ assets, the policies make clear Border to Coast’s approach to long-term engagement and active ownership, it announced today.

The revised policies – the Responsible Investment Policy and the Corporate Governance and Voting Guidelines – clarify and strengthen the pool’s voting position on issues such as climate change and diversity ahead of the 2022 AGM season.

They also outline four key themes which will form a vital part of its engagement in the years ahead, the investor stated.

The themes, updated in recognition of the evolving nature of environmental, social, and governance (ESG) risks that could impact corporate value, will help shape how Border to Coast engages with portfolio companies, demonstrating its priorities as an active steward of its partner fund assets. The four themes are:

  • Low Carbon Transition;
  • Waste and Water Management;
  • Social Inclusion and Labour Management;
  • Diversity of Thought

Jane Firth, head of responsible investment at Border to Coast, said: “Responsible investment and sustainability are central to Border to Coast’s ethos and a key part of delivering our partner funds’ objectives. Now, more than three years since our founding, it is important that we continue to evolve and update our approach to engagement, including our priority themes, to ensure we continue to work effectively as an active owner.”

She added: “We know that we are stronger when we work together, collaborating with other institutional investors and partner organisations such as Robeco to make our voice heard. By continually evolving our approach to responsible investment we can ensure we make a difference both in the wider world, as well as for our partner funds in the LGPS.”

According to meeting minutes from Bedfordshire Pension Fund (BPF), one of Border to Coast’s client funds, it has sought further clarity from the pool “in regards to what was meant by diversity of thought and what this theme was to achieve”. 

A spokesperson for the pension fund committee said it did not have any concerns about the inclusion of diversity of though as a concept for engagement, and that the request for clarification was set to be discussed at a future meeting of the relevant sub-committee.

Climate Change

In line with its commitment to achieving net zero emissions across its portfolios by 2050 or sooner and as a supporter of the investor group Climate Action 100+, Border to Coast has further strengthened its stance on climate change.

It will now vote against the chair of the board where a company in high-emitting sectors fails the first four indicators of the Climate Action 100+ Net Zero Benchmark.

Diversity

Border to Coast has also strengthened its stance on boardroom diversity and will challenge FTSE 100 companies where there is not at least one director of colour on the board, unless mitigating factors or plans to ensure it is met have been disclosed.

This follows recommendations by the Parker Review of ethnic diversity on UK boards four years ago which laid out expectations for all boards to have improved representation by 2021.

As members of the 30% club investor group, Border to Coast will also engage with FTSE 350 companies where there is less than 33% of female representation on the board.

This article was updated after publication to include the statements relating to Bedfordshire Pension Fund.

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