Issue - meetings

41.1     The Committee  considered the Fund’s Risk Register.

41.2     The Committee’s discussion included the following key issues:

• There should be a risk added relating to trading issues resulting from the completion of Brexit, for example, border risks such as Northern Ireland; labour shortages; and inflation of food prices.
• The ESPF is far more advanced in how it has structured its portfolio to mitigate climate change risk compared to other Local Government Pension Schemes (LGPS) and has done significant work to lobby government through the Institutional Investors’ Group on Climate Change (IIGCC). Further examination of the risk of climate change to the Fund, however, is necessary and this is due to be undertaken in the new year via climate scenario modelling. This will help determine the Fund’s best strategy for mitigating risk and the risk register will be updated following this work. This piece of work will look at the impact of various models of temperature change on the financial markets and how this could affect the value of companies that the Fund is invested in, via its fund managers, and the time period over which it will pose a risk. Climate modelling is complex and the Fund’s officers are currently liaising with organisations about the best approach to undertaking this work, including speaking to fund managers about how they approached climate modelling that allowed them to publish their Taskforce for Carbon related Financial Disclosure (TCFD) statements.
• There are also potential risks to the Fund from climate change indirectly, for example, the cost to the Fund through its exposure to commercial property and the potential need over the next 15 years to retrofit these assets to meet any national target to decarbonise the economy.

41.3     The Committee RESOLVED to agree the Risk Register subject to officers considering the addition of the following:

1) a risk around the transition to new trading arrangements; and

2) a review of the climate change following the climate scenario modelling.