The Committee considered a report providing an update on the investment activities undertaken by the
East Sussex Pension Fund (ESPF).
47.2 The Committee’s discussion
included the following key issues:
Passive equity funds are the source of around 75% of
the Fund’s exposure to fossil fuels. The recent equity
changes are expected to reduce holdings in fossil fuel companies
from 4% to 2% of the value of the Fund.
The ESPF retains 10% of its assets, or 25% of its
holdings in equities, in several passive regional equity funds
managed by UBS. These are standard market index tracking funds and
so are not weighted against fossil fuel companies, unlike the
majority of the ESPF’s equity funds. Discussions about what
to do with these remaining assets will take place with the new
investment adviser, ISIO, once they are appointed in February
Any decision about divestment from index tracking
funds needs to account for the loss of cash to the Fund from
divestment in established fossil fuel companies that tend to pay
dividends to shareholders.
The Fund’s active managers – Newton and
Ruffer – are members of
the Institutional Investors’ Group
on Climate Change (IIGCC), which pushes companies to align with the
Paris Agreement. The IIGCC encourages its members to submit motions
at shareholder meetings for action on climate change and has been
very aggressive in this regard (investment managers are
shareholders on behalf of the ESPF). Most Environmental, Social and
Governance (ESG) consultants are in favour of this approach rather
than blanket divestment from a sector.
47.3 The Committee RESOLVED
1) note the Action Log and Investment
Workplan (Appendix 1);
2) note the Quarterly Investment Report
from the Investment Advisor, Hymans Robertson (Appendix
3) agree the revised Investment Strategy
Statement (Appendix 4); and
4) note the content of this
5) Agree to ask the
new investment advisors to review the remaining 10% of assets held
in regional index equities.