Vanessa Shia, head of private markets at London LGPS CIV

The need for mangers to demonstrate a credible and sophisticated ESG strategy is a deal breaker, said Vanessa Shia, head of private markets at London LGPS CIV, speaking at PEI Group’s Women in Private Markets Summit: London 2022.

“Going forward, we are only really looking at funds that are at least an Article 8…this is a bare minimum. And if they are not Article 9 then we would like to understand why,” Shia said.

London LGPS CIV, established in 2015 by London Local Authorities, manages London Local Government Pension Scheme (LGPS) assets and is one of eight UK LGPS asset pooling companies.

“We are looking for managers that can clearly demonstrate within their investment practices, a strong ESG or impact focus with a dedicated ESG team. We want to see how they are making strides on their ESG reporting and how they are engaged with their portfolio companies on this, as well as how they are using their ESG data,” Shia said.

Within impact investing, LGPS is paying “close attention” to how managers are aligned with the definition of impact, Shia said. “There clearly needs to measurability of sustainability intentions behind investments. For us, what’s important about setting impact objectives is not just determining SDGs but ensuring there is a demonstration of how they are aligning with the thesis of these goals.”

In terms of what areas of impact LGPS is targeting, Shia noted that there is a “significant gap” in the impact market for a social focus. LGPS is currently looking to back funds that are creating affordable housing in the UK, she added.