Local Government Super, an A$11 billion ($8 billion) superannuation fund focused on New South Wales government employees, hired Pacific Investment Management Co. to manage A$440 million in an ESG fixed-income mandate across global credit and global bonds.
This is the first time LGS has awarded a mandate specifically incorporating environmental, social and governance factors into its investments for global credit and bonds, according to a news release Wednesday by the Melbourne-based fund.
Bill Hartnett, the fund's head of responsible investment, said in a telephone interview LGS is looking to integrate ESG across all asset classes, with growing evidence that applying those factors to fixed income will be beneficial for its portfolio.
He cited PIMCO's ESG scores and engagement practices as criteria that helped the Newport Beach, Calif.-based manager emerge as the choice among three or four managers that "are really top notch in this area."
PIMCO was already managing international bonds for LGS, with the news release citing the fund's "long-standing relationship" with the firm.
The fund's annual report for its fiscal year ended June 30, 2017, showed PIMCO, Melbourne-based Omega Global Investors and Philadelphia-based Brandywine Global Investment Management managing a combined 21%, or A$525 million, of the A$2.5 billion fixed-income allocation in international bonds.