Agenda item

1.1.        The Board considered the Pension Committee’s agenda for its 4 September meeting. A draft of Hymans Robertson’s quarterly performance report was tabled at the meeting.

1.2.        Ola Owolabi (OO), Head of Pensions, explained that the Pension Committee agenda would also include a presentation from the Environment Agency about Environmental, Social and Governance (ESG) issues. This will tie in with other discussions about ESG at the meeting.

Item 5: Petition – Disinvest from fossil fuels

1.3.        OO explained that Brighton & Hove City Council’s (BHCC) notice of motion calling for disinvestment over a five-year period would be included as an additional appendix to the report.

1.4.        Councillor Kevin Allen (KA) questioned whether once ACCESS is operational the East Sussex Pension Fund (ESPF) will have as much ability to influence companies’ environmental, human rights and other policies as they will no longer be able to hire and fire fund managers.

1.5.        OO said that, once ACCESS is operational, fund managers will be allocated by the ‘operator’ to sub-funds of different asset classes. Individual funds will retain an Investment Strategy Statement (ISS), which sets out how their fund considers ESG investments, and will be able to allocate their assets into ACCESS sub funds based on their ISS and the Fund Assets Allocation. In addition, the Local Authority Pension Fund Forum (LAPFF) will continue its role in influencing fossil fuel companies so long as local authority pension funds invested in them.

1.6.        Sue McHugh (SM) asked whether a watching brief should be kept on the performance of fossil fuel companies now that disinvestment seemed to be gaining traction amongst local government pension funds and other investors.

1.7.        OO said that the Pension Committee was considering the issue of ESG investments closely and had dedicated considerable discussion to the matter at the investment strategy review day on 17 July. Those discussions will form the basis of a report being drafted for consideration by the Pension Committee at its 4 September meeting on proposals for the ISS in relation to sustainable investment, for example, carbon tilting. He confirmed that if there was any agreement to change the ISS it would require a formal decision by the Committee, and would go to the Board first for comment. He clarified that the investment strategy day was an opportunity to look in depth at ESG issues and no decisions were taken during the event.

1.8.        Councillor Richard Stogdon (RS), Chair of the Pension Committee, added that only one local government pension fund had so far resolved to dis-invest in fossil fuels. Based on his discussions with representatives of other local government pension funds, it seems that most administering authorities are in agreement that whilst they are talking about disinvestment, there is a unanimity that total disinvestment is a blunt instrument that would be difficult to implement without causing wider disruption to pension fund returns.

Item 8: Quarterly Performance Report – Hymans Robertson

1.9.        OO confirmed that the performance of fund managers, as indicated in the Hymans Robertson’s report, has been very good – with M&G – Bonds in particular outperforming its benchmark over the past quarter. Schroders had not yet submitted its performance figures but they are expected to be good. He added that Schroder Property was still on watch due to the significant change in management at the firm causing uncertainty as to its strategic direction.

1.10.      The Board RESOLVED to:

1) note the report; and

2) request that the ESG report due to be considered by the Committee in September is considered at the 7 November Board meeting.

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