LCP toughens up its ESG policies

Before now, much of the work involved with responsible investment has focused on training, policies, disclosure and compliance.

These are important, but the time has come to make real-world differences with a greater focus on engagement and action. 

It’s time we got off the fence, to provide bold advice to our clients and strong engagement with asset managers

Ken Willis, LCP

Systemic risks affect the whole economy and though they cannot be avoided, investors can mitigate them.   

Show us your working out

The philosophy builds on LCP’s insistence that asset managers must have joined the Net Zero Asset Managers initiative to be eligible for the company’s buy rating. 

The consultancy is also asking asset managers to: 

• use specific and relevant company case studies as much as possible;

• contribute to common principles and approaches for assessing responsible investment where possible;

• bring new products and ideas that will enable the company’s clients to invest with greater real-world impact;

• provide examples that give real insights into their work on clients’ stewardship priorities; and 

• discuss, debate and collaborate with fellow industry professionals, including other managers.

LCP partner and head of responsible investment delivery Ken Willis said: “Our responsible investment philosophy is a clear statement of intent – so you should expect to see some changes to how we advise. 

“It’s time we got off the fence, to provide bold advice to our clients and strong engagement with asset managers.”

Everybody ought to make a change  

Asset managers are not the only ones being asked to change their mindset by LCP. Asset owners are being called on to be open to making real changes to their investments, see a wider range of managers, and more often, to get updates on their activities and to allocate more time to discuss responsible investment.

Lawyers are also being asked to be consistent with any challenges raised to responsible investment by applying the same tests they would to other investment styles or factors. 

LCP partner and head of responsible investment Claire Jones said: “Systemic risks like climate change, biodiversity loss and inequality pose real threats to our clients’ long-term investment objectives. 

“We want to help our clients invest in a way that helps to alleviate these risks rather than exacerbate them, by placing greater emphasis on the real-world impacts of their investment decisions.”