LCP’s fourth stewardship report: an update on our responsible investment and stewardship activities
Investment Pensions & benefits Responsible investment and stewardship
To maintain LCP’s status as a signatory to the UK Stewardship Code, we prepare a report each year, setting out what we have done to meet the expectations of service providers like us.
We recently submitted our fourth report to the Financial Reporting Council (FRC), covering the year to 31 March 2024, and expect to hear the outcome during the first quarter of 2025.
We’ve taken a different approach this year, to make the report more useful and accessible for our clients and other stakeholders. Rather than reporting against each of the FRC’s six principles in turn, we’ve structured the information in a way that reflects how LCP approaches responsible investment (RI) and stewardship. It provides a comprehensive overview of our work in this area, as well as updating readers on specific activities and achievements over the year.
Highlights of the year to 31 March 2024
Increased our focus on systemic risk, with personal involvement of our CEO.
Developed five asks to guide our climate policy advocacy.
Established ICSWG influence workstream to engage policymakers proactively.
Advocated for reforms to enable better use of DB pension assets.
Launched Monitor, including climate dashboard, to enhance clients' portfolio oversight.
Developed stewardship dashboard to support clients' voting analysis.
Updated our net zero and stewardship expectations for investment managers.
Expanded the educational sessions we offer clients with our investment conference.
Carried our in-depth research into the stewardship of five key managers.
Conducted our third assessment of bulk annuity insurers' responsible investment practices.
Researched LDI managers' climate policy advocacy and developed best practice principles.
Launched LCP Transform to support investment in the energy transition.
What does our report cover?
The FRC defines stewardship as “the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, environment and society”. As an investment consultant, LCP doesn’t manage money directly for our clients or offer our own investment funds, so we do not allocate, manage or oversee capital ourselves. Instead, we support and advise asset owners on their responsible allocation, management and oversight of capital.
In our latest stewardship report, we cover in turn:
- Our firm’s purpose, strategy, culture and people – the context for our stewardship services to clients
- Our investment department – the people, processes and activities that support our clients’ allocation, management and oversight of capital
- Responsible investment at LCP – how we integrate consideration of environmental, social and governance (ESG) factors throughout our support for clients’ allocation, management and oversight of capital
- Our four RI workstreams:
- RI in manager research – driving and developing the consideration of RI in our manager research and the incorporation of this research in our client advice.
- Manager stewardship – helping our clients engage with investment managers, with a focus on the managers’ voting and engagement on behalf of clients.
- Climate change – ensuring climate change is embedded in our investment advice and encouraging greater engagement from our clients on climate change.
- Systemic stewardship – engaging with policymakers and regulators, both directly and in collaboration with others, to address systemic financial risks such as climate change.
- An evaluation of our stewardship – how effective we believe we are being in supporting clients’ stewardship and how we are continuing to evolve and improve it.
We invite your feedback
We encourage you to read our report, to find out more about how we approach stewardship and recent highlights of our work (shown above).
Please tell us what you think, not only about the report itself, but – far more importantly – about the way we support your stewardship and anything you’d like us to do differently in future.
