Sustainability governance and management

LGS believes that effectively implementing responsible investment practices requires sound governance procedures and dedicated management attention. For LGS, this has resulted in formal involvement from the Board and executive team, the employment of a dedicated Sustainability Manager and increasing our commitment to sustainability to cover corporate matters.

Board and Investment Committee.

The initial impetus for LGS’ commitment to responsible investing originated from the LGS Board in 1998. Since this early time, the LGS Board and its Investment Commitment have continued to emphasise the importance of implementing responsible investing initiatives across the fund. The LGS Investment Committee actively oversees and interacts with LGS’ management on RI issues. The Investment Committee receives a Sustainability Report in each of the regular Investment Committee meetings and makes themselves available to meet and be made aware of new trends and opportunities in this emerging area.

The LGS Board approved the LGS Sustainable and Responsible Investment Policy after its recommendation by the LGS Boards' Investment Committee. This Policy is subject to regular review. References to the Sustainable and Respnsible Investment Policy is included specifically in other LGS policies including the overarching Investment Policy Statement, Risk Management Strategy Statement and the LGS Due Diligence Policy

The Sustainable and Responsible Investment Policy sets out the sustainability framework for all investments made by LGS. It covers the total investment portfolio, with specific policies for private equity and direct property investments as follows:

• The regulatory framework of LGS
• Selection of external asset consultants
• Selection and monitoring of investment managers, private equity and targeted investments
• Collaboration and engagement with other sustainable investing organisations
• Negative screening and replacement of investments
• Green management of direct property
• Commitment to the issue of climate change
• Proxy voting to influence company's environmental decisions
• Reporting of our sustainability strategy to members and
• Corporate citizenship.

The LGS Strategic Sustainability Committee

The LGS Strategic Sustainability Committee meets quarterly and its members include two members of the LGS Board, the CEO, CIO, LGS Direct Property team and the LGS Sustainability Manager. The LGS Strategic Sustainability Committee considers:

• The progress of the development of various LGS sustainability and responsible investment policies to ensure they are finalised
• Implementation of the LGS sustainability and responsible investment policies
• Much of the focus to date has been on the significant greening initiatives for the LGS direct property portfolio.

LGS Sustainability Manager.

In 2010 LGS employed a full time Sustainability Manager whose role is to further progress implementation of LGS Sustainable and Responsible Investment Policy across its investment portfolio and to assist the communication of our efforts in this area by working with management and staff across LGS. The Sustainability Manager reports directly to both the LGS Chief Investment Officer and LGS CEO. The Sustainability Manager is required to submit reports on sustainability issues to every Investment Committee meeting.

External research and collaborative industry groups

LGS sources company specific ESG research and engagement services and is active member of Australian and international industry groups focused on responsible investment.