Northern Trust Asset Management has won a mandate to manage the Australian Labour Union Cooperative Retirement Fund’s (LUCRF) AUS$220m ($205m), World ex-Australia index mandate incorporating environmental, social and governance (ESG) criteria.

ESG screening is an core part of the fund’s investment decision-making process, according to Roger McIntosh, head of investments at LUCRF.

"Northern Trust's extensive experience managing ESG portfolios, coupled with their ability to provide a customized investment solution, were key factors in our decision,” he added.

The mandate will exclude tobacco companies and cluster munitions manufacturers, which aligns with the fund’s values and the United Nations' Principles for Responsible Investment. The indexing process is designed to achieve similar benchmark risk and returns as a full-replicating strategy but with lower transaction costs.

"Increasingly we are seeing clients maximize the benefits of combining indexing strategies with ESG criteria," said Bert Rebelo, head of business and strategy for Northern Trust Asset Management in Australia and New Zealand.