Issue - meetings

11:20

This report provides an opportunity for the Committee to undertake a formal annual review of all its major policy documents, in line with the requirements under the Regulations (PF13). The Committee has previously agreed to review all such documents, on an annual basis (at a minimum), at its scheduled June meeting.

Please find attached at PF13 the following policy documents:

Annex 1 – The Funding Strategy Statement

Annex 2 – The Investment Strategy Statement

Annex 2(b) – Addressing Climate Change Position Statement

Annex 3 – Governance Policy and Governance Compliance Statements

Annex 4 – Communications Policy

Annex 5 – Early Release of Benefits Policy

Annex 6 – Pension Fund Scheme of Delegation

Annex 7 – Administration Strategy

Annex 8 – Procedure for Reporting Breaches of Law to the Pension Regulator

Annex 9 – Administering Authority Discretions

In relation to Annex 2 ‘The Investment Strategy Statement’, Councillor John Sanders has put forward the following motion for this Committee to consider:

‘In the light of the recent Motion in Full Council on 2 April 2019 to acknowledge a climate emergency, the Pension Fund Committee is called upon to instruct officers to investigate the best possible way it can divest itself of all fossil fuel investments (ie. the equity or bond of any company which derives more than 50% of its total turnover from the extraction and production of fossil fuels) as soon as is reasonably practicable whilst mitigating any impact on the value of the fund’.

The Committee is RECOMMENDED to:

(a)          approve the revised policy documents as set out in Annexes 1, 4, 5 and 7, noting the changes in the documents as discussed above;

(b)           approve the revised Investment Strategy Statement as set out in Annex 2, noting the changes as discussed in the report and

                                                i.        re-confirm its position that a blanket divestment policy is not an appropriate approach for the Pension Fund, nor to address the risks associated with climate change; and

                                              ii.        endorse the current approach and direction of travel set out in the Addressing Climate Change Position Statement, and ask Officers to fully engage in the process for developing the full Climate Change Policy document and to report back to the Committee on a timely basis;

(c)          re-state its approval in principle to the changes set out in Annex 3 to the Governance Policy and Governance Compliance Statement and RECOMMEND to Council via the Audit and Governance Committee the corresponding changes to the Terms of Reference and Constitution of the Pension Fund Committee;

(d)          agree the delegation to the Services Manager (Pensions) the responsibility for exercising the new discretionary decisions as set out in paragraph 47 above, and the subsequent changes in the scheme of delegation to ensure it is consistent with the schedule of Administering Authority Discretions; and

(e)          note that no new changes have been made to the Scheme of Delegation and the Procedure for Reporting Breaches of Law to the Pension Regulator.

(a)  Approved;

(b)  Following discussion at the pre-meeting with the Chairman, Deputy - Chairman and Opposition Spokesperson Officers were asked to draft an amended recommendation (b) in respect of the Investment Strategy Statement.  The subsequent decisions made at Committee were as follows:

To approve the revised Investment Strategy Statement as set out in Annex 2, noting the changes as discussed in the report and

(i)            endorse the current approach and direction of travel as set out in the Addressing Climate Change Position Statement, including:

·         the integration of consideration of environmental and social risks, as well as good governance and stewardship into all decision-making processes

·         contributing to a more sustainable and resilient financial system in alignment with the UN Sustainable Development Goals

·         ensuring all portfolios across all asset classes are carbon and climate aware

·         decarbonising the listed portfolios, and developing measurable objectives and targets

·         accessing positive climate impact investment opportunities. such as the 35% investment in renewable energy funds within the infrastructure portfolio 

·         active engagement with the underlying companies through asset managers, engagement and voting specialists and collaborative forums with other investors

·         improving the transparency of reporting including carbon footprinting and fossil fuel exposure and the impacts of our engagements

(ii)          ask Officers to set up a Climate Change Workshop in the Autumn to define timescales, milestones and reporting mechanisms for the above approach and to contribute to the Climate Change Policy being developed by Brunel, seeking participation from a wide range of stakeholders to ensure a balanced discussion; and

(iii)         note the view of Brunel that in light of the above approach, they do not consider a top down approach to divestment to be an appropriate strategy for its clients.

(c)  to refer these changes to the next meeting of Committee in September following further work;

(d)  agreed; and

(e)  noted.

Prior to discussion on this item, in relation to Annex 2 – The Investment Strategy Statement - the Chairman read out a revised recommendation to the report PF13, which had been published on the Committee’s Addenda prior to the meeting. This was the outcome of discussions with the Chairman, the outgoing Deputy Chairman and the Opposition Spokesperson for this Committee and was a replacement for the current recommendation (b) on the Agenda. The recommendation, as read, was as follows:

‘approve the revised Investment Strategy Statement as set out in Annex 2, noting the changes as discussed in the report and

(i)           endorse the current approach and direction of travel as set out in the Addressing Climate Change Position Statement, including:

·         the integration of consideration of environmental and social risks, as well as good governance and stewardship into all decision-making processes

·         contributing to a more sustainable and resilient financial system

·         ensuring all portfolios across all asset classes are carbon and climate aware

·         decarbonising the listed portfolios, and developing measurable objectives and targets

·         accessing positive climate impact investment opportunities. such as the 35% investment in renewable energy funds within the infrastructure portfolio 

·         active engagement with the underlying companies through asset managers, engagement and voting specialists and collaborative forums with other investors

·         improving the transparency of reporting including carbon footprinting and fossil fuel exposure and the impacts of our engagements

(ii)          ask Officers to set up a Climate Change Workshop in the Autumn to discuss how to further develop the above approach and contribute to the Climate Change Policy being developed by Brunel, seeking participation from a wide range of stakeholders to ensure a balanced discussion; and

(iii)        note the view of Brunel that in light of the above approach, they do not consider a top down approach to divestment to be an appropriate strategy for its clients’.

Before discussion on the above, and consideration of the wider recommendations the Chairman invited the speakers to give their addresses:

Julia Spragg – on behalf of Fossil Free Oxfordshire (FFO)

Julia Spragg began by stating that FFO continued to be seriously concerned about the consequences of climate change, adding that this Committee had the power to make a real difference. She cited a press report in October 2015 which stated that:

-       the £2.9bn Environment Agency Pension Fund (EAPF) had become the first in the world to change its investment choices to help meet the internationally agreed target of limiting global warming to 2 degrees centigrade;

-       this move would include divestment of 90% of its coal assets and 50% of its oil and gas stocks by 2020;

-       the EAPF would also invest 15% of the fund in low-carbon energy, energy efficiency and other businesses that help tackle climate change by 2020 and it had already moved its £280m of global share investments to a low-carbon index;

-       the EAPF’s chief investment officer that said that the new policy was not a knee-jerk reaction but followed over a decade’s analysis of the financial risks  ...  view the full minutes text for item 35