Issue - meetings

Report by the Director of Finance (PF5)

The report provides the feedback to the Committee on the recent consultation exercise on the Investment Strategy Statement including the Climate Change Policy, and proposes final changes to the draft document.

The Committee is RECOMMENDED to consider the responses to the recent consultation exercise and approve the changes to the draft documents as set out in the report and incorporated in Annex 3.

It was agreed to consider Item 7, Investment Strategy and Item 8, Climate Change Policy Implementation Plan together.

The Local Pension Board had before them the report to Pension Fund Committee that provided the feedback to the Committee on the recent consultation exercise on the Investment Strategy Statement including the Climate Change Policy, and that proposed final changes to the draft document.

The Local Pension Board also had before it a report to Pension Fund Committee that set out how the Pension Fund plans to implement its Climate Change Policy (hereinafter referred to as ‘the Policy’). The key commitment of the Policy is to transition investment portfolios to net-zero Greenhouse Gas Emissions (GHG) by 2050, consistent with seeking to limit the temperature increase to 1.5ºC above pre-industrial levels. The actions in the implementation plan had been developed to work towards delivery of this commitment.

Sean Collins, Service Manager Pensions introduced the contents of both reports. He noted that the number of consultation responses had been disappointing but that those received were mostly in support of the direction of travel. The second report looked at actions to be taken in support of the Policy and included carbon emission targets. Sean noted that there was still a lot of work to do and there would be quarterly progress reports. They continued to work with Fossil Free Oxfordshire, and Sean added that Alistair Bastin was a scheme member representative on the Working Group that had been established. Sean also noted that the collaboration was being written up nationally as a case study and Alistair commented that he would be happy to be involved in that. It was agreed that Alistair receive a copy of the draft case study for comment. Sean advised that following a lengthy debate at the last meeting the Pension Fund Committee had endorsed the Policy and the implementation plan.

During discussion members:

• Highlighted that the pandemic had had a profound effect on the use of fossil fuels with oil consumption down and large producers being forced to make write offs on ‘to be exploited’ assets. This would need to be taken into account in future investment decisions. Sean commented that those issues were what would be considered as part of those investment decisions but that it did not affect the Investment Strategy or implementation plan.
• Queried why there were no performance figures to the June meeting of the Pension Fund Committee. Sean explained that the situation was too volatile and that the figures for March 2020 would have been irrelevant to the situation in June 2020. There had been a summary from the Independent Financial Adviser.
• Commented that the active management response to covid 19 was worse than the passive fund management. Referred to information on asset allocation and queried why the Committee had not moved into Passive Low Carbon options. Sean explained that this had been fully discussed at the March meeting of the Committee. The current low carbon option was not compliant with The Policy and Brunel  ...  view the full minutes text for item 18

Report by the Director of Finance (PF5)

The report provides the feedback to the Committee on the recent consultation exercise on the Investment Strategy Statement including the Climate Change Policy, and proposes final changes to the draft document.

The Committee is RECOMMENDED to consider the responses to the recent consultation exercise and approve the changes to the draft documents as set out in the report and incorporated in Annex 3.

Recommendations Agreed, (on a motion by Councillor Mark Lygo, seconded by Councillor Kevin Bulmer and carried by 10 votes to 0, with 1 abstention) subject to committing 100% of the UBS portfolio to the Sustainable Global Equities portfolio.

In March, this had Committee reviewed its Investment Strategy Statement and completed the fundamental review of its asset allocation following on from the tri-ennial Fund Valuation.  For the first time, the Investment Strategy Statement included a Climate Change Policy as an annex to the document.

As required under the relevant Regulations and guidance, the Committee agreed to consult all key stakeholders on the draft Statement approved at the March meeting.  This process was undertaken over a 6-week period from the beginning of April to the middle of May.  The Committee now had before it a report, which set out the key issues raised in the consultation responses and recommended the Committee to approve the final Investment Strategy Statement including the changes to the draft Statement set out in this report.

In the view of the number of the consultation responses highlighting key issues in the implementation of the Climate Change Policy rather than any specific changes to the Policy itself,  it was felt that the report needed to be considered alongside the Climate Change Policy Implementation Plan included on today’s agenda.

The Chairman indicated that it was his intention to take item 5 and 6 together, as they were interrelated.  This was agreed by the Committee

In introducing the report, Mr Collins set out the approach they took to the consultation.  All possible steps had been taken to reach all members of the scheme including, sending out the consultation to all employers asking them to share it with all scheme members.  Officers also made the consultation available on the Website and notified scheme members by newsletter.  27 responses had been received and the responses were set out in Annex 2.

The vast majority of consultation responses had talked about the Climate Change Policy which was expected as it was the main new area of the consultation.  The main areas of the consultation were set out in Annex 1.  The vast majority of the consultation responses were very supportive of the policy and the direction of travel.  The main comments were in relation to it be strengthened slightly to make it more explicit in certain areas. 

The report sets out the four main key response areas.  There was agreement that the Paris Agreement should be used as a benchmark, together with a comment about tightening up targets on that.  There were more people wanting blanket divestment in fossil fuels, although those who accepted the position, wanted greater clarity around the targets that were being set and the sanctions that would follow.  Metrics were also provided, and these were set out in the report.  Other issues that people raised were also included in the report.   These were set out in terms of what had been done in terms of changing the Investment Strategy Statement and Policy; the issues we thought were issues of detail rather than issue of principle had been set out in the implementation plan.  There were also a few details that they thought they could not respond to and  ...  view the full minutes text for item 103