Agenda item

The Board is asked to review the relevant documentation from peers and consider whether further recommendations are required to the Surrey pension Fund Committee.

Declarations of interest:

None

Witnesses:

Neil Mason, Senior Advisor (Pension Fund) Pensions and Treasury

Key points raised during the discussion:

1.    The Board had considered the draft report on environmental, social and governance matters and noted the draft letter addressed to the Border to Coast Pension Partnership (BCPP) (page 25 of agenda papers).

2.    The Chairman had explained that before the letter had been sent a draft BCPP Responsible Investment Policy had been received. This Policy addressed all the points requested in the Fund’s draft letter save for the pooled fund making arrangements to develop a specific low carbon passive investment vehicle. It was agreed that the Fund’s letter would be updated to acknowledge the draft BCPP policy and the additional recommendation.

3.    It was noted that the BCPP pooling arrangement provided a satisfactory approach to ESG matters.

4.    The Board shared the view that it was important to strike a balance between investment risk and returns, whilst meeting liabilities. It was agreed Surrey’s approach was reasonable, being mindful not to invest funds that bring the Fund into disrepute.

5.    The Board were informed how, in 2013, Surrey’s Pension Fund declined to disinvest in the tobacco industry as the Committee did not want to introduce negative screening of stocks.

6.    Officers indicated that the South Yorkshire Pension Authority climate change policy sought to establish exposure to climate change and carbon risk. The Board agreed to recommend to the Committee that a carbon audit of the Fund’s portfolios be commissioned.

Actions/ further information to be provided:

The Local Pension Board recommends that the Pension Fund Committee seeks to establish the Fund’s exposure to climate change and carbon risk through the commissioning of a carbon audit of the Fund’s portfolios. Results may then be reviewed and used to focus engagement and strategy going forward.

Recommendations:

The Board agreed that the draft letter on ESG would be updated to acknowledge the draft BCPP Responsible Investment Policy.