Agenda item


To receive any questions or petitions.



1.  The deadline for Member’s questions is 12.00pm four working days before the meeting (9 March 2020).

2.  The deadline for public questions is seven days before the meeting (6 March 2020).

3.  The deadline for petitions was 14 days before the meeting, and no petitions have been received.



The Chairman noted that the Committee had received a large number of additional correspondences relating to the Fund’s investment in fossil fuels, which would be replied to in due course. He explained that the Fund’s position on the matter was outlined in the Committee’s response to the open letter (Annex B) and he also read out a short statement concerning investment decisions as it was of widespread interest:


All investment decisions are in accordance with the published fund Investment strategy. This is to protect the Fund’s interests and is in line with our fiduciary duty. This Committee makes the final decisions on any changes to the strategy following due process of consultation and discussion.


Surrey Pension Fund Committee members have received many representations through attendance at our meetings, email and other means of communications. Many of these relate to Environment, Social and Governance (ESG) matters and investments.


In response, the Committee, at the meeting of 20 December 2019, authorised a sub-group to review our Responsible Investment Policy and make recommendations to enhance the focus on ESG.


I can announce to the Committee and the public that this process has started and indeed the Strategic Finance Manager (Pensions) has spent much of this week moving this forward. Project planning and resource organisation are both well advanced. 


The objective is to develop a holistic approach to all ESG considerations and develop robust guidelines that will guide our future investment choices.

This Committee will consider all recommendations brought forward by the sub-group and determine which, if any to adopt.


Six questions were received from members of the public. The responses can be found attached to these minutes as Annex A.


Supplementary questions were asked from six members of the public and responses can be found below.


1. Supplementary question asked by Jenifer Condit:

The Committee’s written responses to Chris Neill and Barry Staff’s submitted questions in December 2019 stated that divesting in the hydrocarbon industry in fossil fuel companies made no impact on the environment. She commented that continuing to invest in large oil and gas company shares lowered those companies’ cost of capital and therefore enabled them to obtain new investment to expand their business i.e. to exploit more oil reserves. She noted that all four of the actively managed equity pools Majedie, Marathon, Western and BCPP were assessed against indices which were not ‘low carbon’ or ‘sustainable’ in nature. She asked the Committee if they thought divesting still had no impact on the environment.



The Chairman responded that the Pension Fund and Committee received informed views on how best to invest the Fund. He explained that the Fund were pursuing engagement as opposed to divestment which was outlined in the Committee’s response to the open letter. The Low Carbon Fund (Indexed Equity Funds) was only one aspect of its asset allocation to minimise risk and maximise returns. The Independent Advisor noted that divesting in large oil and gas companies would raise those companies’ cost of capital. He explained that academic evidence showed that companies who were engaged with were moving away from carbon-based fuels. The Investment Consultant added that Border to Coast (BCPP) were supportive of engagement.




  1. Supplementary question asked by Simon Hallett:

Mr Hallett thanked the Committee for its reply to the open letter, commending the strategy of engagement. However, he asked the Committee whether they were aware of the contradiction of its view on the incompatibility between engagement and divestment. He provided two examples of the contradiction which were within the December 20 2019 agenda concerning Centrica and Border to Coast’s resolution put to National Australia Bank asking them to reduce their exposure to fossil fuel assets (Annex C - full supplementary question and the response).



The Chairman explained that the Fund were not saying that engagement was perfect, but it was better than not engaging at all and industry experts such as Robeco supported engagement as opposed to divestment. A further review on engagement would be provided at the next Committee meeting in June. He added that Surrey Pension Fund was only one of eighty-nine across the Local Government Pension Scheme (LGPS) and was working collectively on issues through the Local Authority Pension Fund Forum (LAPFF). The Fund was aware of the risks as a result of climate change such as investing in stranded assets and the Committee sub-group on Responsible Investment were developing the Fund’s engagement approach.


The Chairman proposed that officers provide the questioner with a written answer, to explain the matter in more detail.


  1. Supplementary question asked by Jenifer Condit on behalf of Isobel Griffiths:

As a scheme member of and contributor to the Surrey Pension Fund, the questioner felt it was a matter of importance that the Fund sought to learn the preferences of its members giving them an option to divert funding to Paris Agreement compliant investors, rather than being forced to invest in fossil fuel companies.



The Chairman replied that it was not feasible to learn the preferences of all the approximately 100,000 scheme members of the Fund, particularly as it was a defined benefits scheme regardless of how investments performed and not a defined contribution scheme.


The Strategic Finance Manager (Pensions) stated that the Pension Fund team and Pensions Administration team were constantly reviewing their communications with scheme members which included the investment strategy of the Fund. The Chairman added that the Fund were more expansive in their thinking by recognising the climate emergency and ESG as outlined in the Committee’s response to the open letter.


  1. No supplementary question was asked by Kirsty Clough.


  1. Supplementary question asked by Nik Huddy:

Concerning a response to a question posed at the last Committee in December in which the Committee replied that it worked with initiatives such as Climate Action 100+ to reduce emissions. The questioner highlighted that the Fund had a fiduciary duty to mitigate risk on returns which was not being met as investments were down substantially and the Fund was tied to its investment manager Border to Coast (BCPP).



The Chairman replied that short term decreases in investments were mitigated through the Investment Strategy Statement which assessed investments over a long period of time and the Fund were actively working with BCPP.


Kirsty Clough asked a supplementary question on whether the Committee could give specific examples on where the Surrey Pension Fund’s engagement with fossil fuel companies had produced tangible results for decarbonisation in order to achieve the net zero targets set out in the Paris Agreement. She also asked how the Fund would strengthen its engagement with companies such as Shell.


In response,the Strategic Finance Manager (Pensions) reiterated that the Fund’s approach to engagement was detailed in the Committee’s response to the open letter.


The Vice-Chairman added that as a result of the Committee engaging with a group asking the Fund to divest, he explained that engagement would be strengthened through ensuring measurable deadlines on Responsible Investment with fossil fuel companies with consequential actions to follow if those companies were not compliant.


  1. Supplementary question asked by Chris Neill:

The questioner stated that the Fund presented its position on divestment of fossil fuel assets as a matter of ESG but not specifically to climate change. He stated that risks highlighted by the Fund in its 2018-19 Annual Report dealt with the corporate governance of companies in which the Fund invested in and failed to address the climate risk. He stressed the financial risks in investing in poorly performing fossil fuels and asked the Fund to reconsider fully divesting from fossil fuels (Annex C - full supplementary question and the response).



The Chairman replied that the Fund’s position had never been not to divest from fuel fossils or to divest from other areas as the Fund’s investments were under constant review. He commented that the current 2019/20 Annual Report measured against the Taskforce for Climate Related Financial Disclosures (TCFD) to provide consistent and transparent information.


The Vice-Chairman recognised that the Committee should ensure a fixed definition of terms on climate related matters to avoid confusion with differing definitions by investment companies for example. It was important that the Committee needed to be more precise on Responsible Investment, understanding how climate change had been evolving, which was difficult due to insufficient data availability and reliability in the investment world.


The Chairman proposed that officers provide the questioner with a written answer, to explain the matter in more detail.


Actions/further information to be provided:


In agreement with the Chairman, officers will provide written replies to

supplementary questions two and six, these will be included as Annex C.


Supporting documents: