More than a dozen UK local authority funds are working on a national procurement framework for environmental, social and governance (ESG) providers, including the provision of proxy voting services.
The new framework, currently being drawn up by Norfolk County Council, will cover an as yet unspecified number of areas including proxy voting, ESG data metrics and more general advice where required by local authority pension schemes (LGPS).
The framework is the latest being undertaken by the National LGPS Frameworks project, overseen by Norfolk Pension Fund, which to date has launched frameworks including ones for legal advice, custody and investment consultancy services.
In July, it announced it was set to hire dedicated procurement staff, citing £16m (€21.8m) in savings as proof of its success.
Alex Younger, investment and actuarial services manager at Norfolk, said the tender had yet to be launched but would follow shortly after two concept viability days in early October with both the 13 involved LGPS and providers.
He said the framework would have “real credibility” due to the involvement of several funds that have previously placed a heavy emphasis on stewardship and ESG, including the Environment Agency Pension Fund, the West Midlands Pension Fund and its counterpart in West Yorkshire.
One of the other funds involved, the Lothian Pension Fund, has previously overseen a joint procurement exercise for voting and engagement services that saw Hermes win a contract from three Scottish LGPS.
Younger noted the uncertainty surrounding the future shape of the LGPS, with the Department for Communities and Local Government (DCLG) currently working with the LGPS Advisory Board on options to pool assets.
The London Pensions Fund Authority and the Lancashire County Pension Fund, both backing the new framework, in July agreed a partnership to pool assets, and other London local authority funds have joined to set up a collective investment vehicle (CIV).
Younger said the framework team was “cognizant” of the uncertainty ahead.
“We are seeking to make future frameworks as robust as possible for an uncertain new model,” he said.