79.1 The Committee considered a report on the Committee’s work programme which includes working groups and training as well as future agenda items. The Head of Pension noted that the agenda of the next meeting in June is quite full and suggested moving the report on carbon foot printing to the July meeting. It was agreed that the July strategy meeting of the Committee will consider the review of the Investment Strategy and the carbon foot printing report.
79.2 The Committee discussed the provision of training for the Committee. Councillor Hilton suggested that it would be good to hear from Dr Ellen Quigley from the Centre for the Study of Existential Risk on the mitigation of climate change through investment policies such as engagement and divestment, and would also like to hear from other Pension Funds on how they are working to align their funds to the 1.5 degree climate change target.
79.3 The Chair and other Committee members commented that the Committee would normally only take advice from qualified investment advisers, and it would appear that Dr Quigley is an academic rather than a professional investment adviser. The Chair asked Cllr Hilton to provide more information to officers on Dr Quigley’s qualification and experience as an investment adviser so they can advise if this training fits in with the Committee’s fiduciary duties. The work involved with the Task Force on Climate-Related Financial Disclosures (TCFD) and the UK Stewardship Code will focus on the alignment to 1.5 degrees. The Head of Pensions commented that the Fund is going to have to set a target for TCFD and have action plans. However, this is made more difficult if the Fund is invested in pooled products. Some LGPS funds have made a commitment to be net zero, but not many have put in place an action plan to support it. Therefore, it may be difficult to find examples of how funds are aligning to the 1.5 degree target, but if there are any examples available, they can be made available to the Committee.
79.4 William Bourne, Independent Adviser to the Pension Committee commented that underlying companies are going to have to change in order get to 1.5 degrees, so engagement and not divestment will be important. In general equities have underperformed and if the Fund chooses not to invest in fossil fuels and mining companies there is some risk involved.
79.5 The Chief Finance Officer commented that officers can comment on the suitability of the suggested training for climate change risk, but the Committee should bear in mind that this is one element of risk the Fund has to consider. It is important to have enough training in a range of issues that helps the Committee meet its fiduciary duties.
79.6 The Head of Pensions outlined that the quarter 4 engagement reports will be sent to the Committee, so they are aware of what the investment managers are doing. The Stewardship Code will also be brought to the Committee so it can see how sustainability criteria are being applied.
79.7 The Committee RESOLVED to:
1) Note the work programme;
2) Move the carbon foot printing report to the July meeting; and
3) Agree to ask officers to consider the training suggestions made during the discussion.