UK - The London Pensions Fund Authority is considering teaming up with other schemes to help improve its shareholder engagement in emerging markets.
The £3.5bn ($4.5bn) fund is unhappy with its current voting activity in the Far East and other emerging markets and will meet with its trustee board next month to discuss ways of improving engagement with companies it holds there.
LPFA chief executive Mike Taylor (pictured) says being an active shareholder is a key part in the fund's objective of being a long term and responsible investor.
"We are not happy with the engagement of voting, which in the past we have delegated to fund managers, and we are looking at how we can tighten that up," Taylor said in an interview with Global Pensions.
"While it is easy to do in the UK, Europe and America, it is less easy in the Far East and emerging markets, and that really is the issue we need to address. The further away you get from home the more difficult it becomes, but we are completely global and our equities are benchmarked against global indices."
The LPFA, which has £1.5bn invested in global equities and about £200m specifically in emerging markets, has a reputation for being at the vanguard of environmental, social and governance (ESG) investment and last year appointed a dedicated ESG specialist to its team.
Taylor said the scheme is looking at two options in particular; hiring an external company to carry out its engagement and voting or by teaming up with other funds.
"The question is whether or not you can achieve your objectives of being responsible when you're investing that far away, where you are not quite sure what governance or environmental issues are," Taylor added. "It seems to be less easy to do and therefore it is less easy to validate what our managers are doing that far away.
"We will have to put a bit more resource into that if we want to do it effectively. Using an external provider is probably the most sensible option as you're likely to get economies of scale there. I don't think we could do it in-house, so would prefer to do it in collaboration with others; either with other similar, like-minded funds or through a provider working for similar funds.
"There are a number of providers out there but we haven't made a decision over what the right option is. We are just floating the option to our board and saying ‘if you want us to assure you we are doing as much as we can in this area, these are the options, which one do you want us to go down?'".
Pension freedoms could generate as much as £1.9bn a year in tax revenue for the next 10 years, according to research by the Pensions Policy Institute (PPI).
The Pension Protection Fund (PPF) has conceded it does not have "all the data we need to calculate" the impact of last month's ruling that some benefits may be unlawful.
A looming court decision on gender equalisation of pension schemes could hit FTSE 100 profits by up to £15bn, Lane Clark and Peacock (LCP) says.
Dutch custodian KAS Bank has created a fintech solution to help schemes save on costs and improve transparency of currency hedging strategies.