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UPDATE ON ANALYSIS FOR NET ZERO TARGETS

Meeting: 23/09/2022 - Surrey Pension Fund Committee (Item 56)

56 NET ZERO CONSIDERATIONS pdf icon PDF 212 KB

This paper provides an update on analysis by Mercer in consideration of the Surrey Pension Fund’s desired date for achieving net-zero.

 

Additional documents:

Minutes:

Witnesses:

Neil Mason, LGPS Senior Officer

Lloyd Whitworth, Head of Investment & Stewardship

Steve Turner, Mercer

 

Key points raised during the discussion:

 

 

1.    The representative from Mercer introduced the report and provided a brief summary of the presentation annexed to the cover report. The presentation noted by Members was published in a supplementary agenda on 24 September 2022.

2.    Cllr Harmer said that they believed it was difficult to assess and conclude which areas to invest in and asked whether there was any documentation which assessed what life would look like in 2030, 2040 and 2050 to aid decision making. The representative from Mercer said they did not have the information available however, when conducting research, an approach was taken that having real world change was about changing behaviours of individual companies, as all would have an impact on global warming.

3.    Cllr Williams asked whether views on net zero considerations were based on the current or future prospects. Officers explained that it was challenging to predict which companies would have the greatest impact on reducing the global carbon footprint. Members noted that officers would expect the investable universe of companies targeting 1.5c / 1.4c, for example, to increase overtime. However it was difficult to predict which specific companies would set a target and how it would be implemented.

4.    Cllr Potter highlighted that the report provided information on an example portfolio made up of 1.5c aligned and net zero investments, however, the Member stated that the detail actually needed was information on the pathway which needed to be followed to become 1.5c aligned and net zero. In regard to the recommendation 1, the Member said that there was no analysis on the pathway to carbon net zero to consider. In regard to recommendation 2, the Member said that it was uninformed by advice or evidence and that they would be against confirming a net zero target date without consideration of the appropriate analysis on the implications. In response, the representative from Mercer explained that it was extremely difficult to provide the requested analysis and Mercer were unlikely to be in a position to provide it, and that the analysis circulated was provided to give the Committee a feel of the potential risk implications of targeting very ambitious timeframes for net zero earlier than 2050.  

5.    Following discussion, the Chairman proposed that the Committee move forward by noting the analysis provided but to withdraw Recommendation 2 for the time being. This proposal was agreed by the Committee.

6.    Cllr Potter asked for detail on how the list of companies to be aligned with 1.5c had expanded within the last two and five years. Officers stated that they would expect the universe of companies aligned to expand and that the level of expansion would be greater than it was previously. Officers agreed to provide a response outside the meeting.

7.    Cllr Williams said that they would welcome further analysis of how the investment universe of companies aligned with 1.5c or below would  ...  view the full minutes text for item 56


Meeting: 09/09/2022 - Surrey Pension Fund Committee (Item 20.)

NET ZERO CONSIDERATIONS

This paper provides an update on analysis by Mercer in consideration of the Surrey Pension Fund’s desired date for achieving net-zero.

 

Additional documents: