The London Borough of Islington Pension Fund’s recently published ‘Summary Annual Report 2024/25’ outlines significant strategic shifts, including a move towards ‘super-pooling’ all assets and a continued focus on ESG integration.
Strategic Asset Pooling Underway
The London Borough of Islington Pension Fund plans to transfer all listed and unlisted assets to the management of the London Collective Investment Vehicle (LCIV) from March 2026. This initiative, part of government reforms to ‘super-pool’ all Pension Funds in England and Wales, will result in LCIV, an FCA-regulated entity, providing principal investment advice. Currently, approximately half of the Fund’s equity assets are already pooled through LCIV. The Fund has five funds, representing 53.1% of its total assets, managed on the LCIV platform, including two global active and one global passive equities (48.6%), and 4.5% commitments to natural capital and private debt II. The estimated fee savings for pooling these four funds for the year were £252,000. (Source: Summary Annual Report 2024/25, page 4, 11)
Refined Strategic Asset Allocation for Future Growth
For the fiscal year 2025, the London Borough of Islington Pension Fund has an agreed strategic asset allocation. The target allocations are: Equities 45%, Property 20%, Private debt 10%, Multi asset credit 7.5%, Infrastructure including Natural Capital 14.5%, and Impact Investment 3%. This strategic allocation aims to maintain a diversified, balanced portfolio. (Source: Summary Annual Report 2024/25, page 7)
New Manager Appointments and Mandate Changes
During the year, the London Borough of Islington Pension Fund transitioned the LGIM MSCI low carbon mandate to LGIM World ESG Paris Aligned. Additionally, the RAFI emerging passive mandate was terminated to reduce the fund’s carbon footprint. The Polen emerging market manager was replaced by Amundi. As per the strategic asset allocation, three impact managers were appointed. (Source: Summary Annual Report 2024/25, page 14)
Increased Allocation to Sustainability-Themed Investments
The London Borough of Islington Pension Fund has over-achieved its target of investing at least 20% of the fund in sustainability-themed investments by the end of April 2026, having reached 40% by March 2025. This includes investments in areas such as low carbon technology and environmental infrastructure. The Fund’s strategy for net zero is based on the commercial logic that the future economy will be dominated by low carbon technologies, presenting investment opportunities during the transition. (Source: Summary Annual Report 2024/25, page 5)
Divestment and Engagement in Responsible Investment
The Fund has significantly reduced its exposure to weapons manufacturers and companies alleged to be complicit in human rights abuses and illegal occupation of land, in response to global conflicts. The Fund has also divested from nearly all fossil fuel extracting companies but believes in engagement with carbon-intensive companies to enhance long-term returns, with further divestment considered if there is a long-term risk to returns from asset devaluation. The Fund is actively involved in the Local Authorities Pension Fund Forum (LAPFF) and the Institutional Investors Group on Climate Change (IIGCC) for engagement. (Source: Summary Annual Report 2024/25, page 5-6)
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