Pensions Talks Interview: Ewan McCulloch, Chief Stakeholder Officer at Border to Coast

Ewan McCulloch, Chief Stakeholder Officer at Border to Coast shared his insights on the benefits and challenges of pooling into larger "megafunds," the feasibility and desirability of local pension investment targets under the Mansion House proposals, and how government frameworks could incentivise increased UK investment. He also discusses the role of pension schemes in achieving net-zero goals, the steps being taken to support these targets, and Border to Coast’s key pension priorities for 2025.

What do you think are the benefits of pooling into larger “megafunds”? And what do you foresee are the biggest challenges?

In terms of the LGPS, the language of ‘megafunds’ reflects the Government’s desire to see further progress on the pooling journey. There is considerable evidence that scale supports efficiency, greater expertise (including in-house investment capabilities) and access to a broader range of opportunities, which delivers greater value for asset owners –in our case the 11 LGPS Funds that own us.  But as important as scale and expertise are, we have only been successful because of our strong culture of collaboration and partnership.  Being united through a common vision and purpose helps you overcome any challenge.  

What are your thoughts on the Mansion House proposals for local government pensions to invest locally, with ambitious local investment targets? Is this achievable and desirable? 

Several of our Partner Funds have a long history of successfully delivering local investment. As a pool, we recently announced our first commitment from our innovate UK Opportunities private markets programme, a £48.5m commitment to Capital Dynamics’ Clean Energy UK Fund which will finance the build of onshore solar and wind farms as well as battery storage.  UK Opportunities is focused on delivering productive finance in local communities across the UK.  A key element of this strategy is the development of close and effective relationships with local authorities and other agencies, such as the National Wealth Fund, to create an investment pipeline.

What do you think the government can do to help incentivise Schemes to increase investment in the UK and what kind of framework or intervention could the government put in place to help facilitate such measures?

Whether through creating larger pools of capital or incentivising investment decisions, the success of any attempt to increase UK investment will be constrained by the extent to which there are sufficient investment opportunities and a policy and regulatory environment which provides long-term certainty. We welcome initiatives the Government is undertaking to address long-term challenges in relation to planning, infrastructure, and skills, as well as building capabilities, such as the National Wealth Fund that will contribute to supporting a pipeline of investable projects and creating sustainable public-private partnership models.

What is the role of pension schemes to meet net zero targets and what steps have you taken within your investment strategies to support the current targets?

Our £2.6bn Climate Opportunities strategy is a good example of how the collective scale offered by pooling supports the LGPS to access the investment opportunities involved in decarbonisation, while also providing the capital needs to fund the energy transition and support global net zero goals. Earlier this year, we were pleased to partner with IFM Investors and pension funds representing some £1.7trn in assets to set out policy recommendations that would support pension capital mobilisation as the Government seeks to decarbonise power by 2030.

What are Border to Coast key pension priorities for 2025? 

Given the proposals set out by the Government in relation to pooling and the LGPS, and with the Pension Schemes Bill to follow in the new year, a strong focus for our partnership in 2025 will be on how we collectively take those measures forward. Collective consideration Partner Funds have already given to our strategic development means we are well-placed to respond to the Government’s priorities but there will be further work to do to develop the required capacity and capabilities against the ambitious timelines that have been set.