LGPS Central looks to reduce exposure to Russian investments

Local Government Pension Scheme (LGPS) Central has instructed its external managers not to increase its existing exposures to Russia and Belarus, and is engaging with them to exit from its current exposures.

The pool stated that the divestment was subject to the challenges posed by market suspensions and the global sanctions imposed on Russia, adding that its fiduciary duty remained “at the forefront” of its discussions.

It has also initiated a review of its portfolio to identify indirect exposures to Russia, with its findings to feed into its engagement and voting processes, as well as its ongoing discussions with its external managers.

Serious environmental, social and governance (ESG) concerns were raised due to the likely event of reduced transparency and weakened governance in Russian corporates and bonds.

LGPS Central said these concerns compromised its abilities and the abilities of its managers to analyse Russian bonds and stocks “in the holistic manner expected of responsible investors”.

Representing around £49bn of assets across 1 million members, LGPS Central is the pool for Cheshire Pension Fund, Derbyshire Pension Fund, Leicestershire Pension Fund, Nottinghamshire Pension Fund, Shropshire Pension Fund, Staffordshire Pension Fund, West Midlands Pension Fund and Worcestershire Pension Fund.

The pool said that I would continue to closely monitor the situation in Ukraine and will review its position as and when events take a “substantively different turn”, and the isolation of the Russian economy is deemed no longer necessary.

Commenting, LGPS Central chief executive, Mike Weston, said: “As a company, LGPS Central Limited are saddened by the abhorrent situation in Ukraine and our thoughts are with all those affected by the conflict.”

LGPS Central’s move to reduce its exposure to Russian investments comes following the Scheme Advisory Board's call for LGPS funds to consider their portfolios' exposures to Russian assets, while several pension schemes, such as Nest and the BT Pension Scheme, have taken action to reduce their Russian-linked holdings.

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