Local Govt Super awards PIMCO $440m ESG mandate

Local Government Super (LGS) has awarded PIMCO an environmental, social and governance (ESG) mandate under which it will manage $440 million across global credit and government bonds.

LGS chief investment officer Craig Turnbull said PIMCO’s investment strategy perfectly complemented the super fund’s commitment to earning long-term sustainable returns for members, while actively managing ESG risks across its investment portfolio.

In line with its responsible investment philosophy, LSG said that PIMCO fully integrates ESG considerations in its investment practices, restricts investments in issuers who do not engage in acceptable practices, invests exclusively in highly-rated ESG stocks, and actively engages with issuers to improve ESG-related business practices.

Adrian Stewart, head of PIMCO Australia, said the fixed-income manager was excited to bring what it believed was an engagement-driven, industry-leading ESG fixed-income solution to the Australian marketplace with LGS, one of its longstanding clients.

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“Responsible investing has evolved and investors have set their sights higher. It’s no longer enough just to screen out undesirable categories; investors want to foster positive social change. Our ESG platform provides the tools to do that without compromising on returns,” Stewart said.

LGS’ Turnbull said the mandate marked the first time the super fund had awarded an ESG-specific global credit and government bond mandate, and while it was not the first to make such an investment, it was a relatively new concept for both the Australian and global market.

“LGS recognises that the long-term prosperity of the economy and the wellbeing of members depends on a healthy environment, social cohesion and good governance of LGS and the companies in which it invests,” he said.