Agenda item

In accordance with Fund’s investment and governance objectives in the 2020/21 Business Plan.

Witnesses:

Neil Mason - Strategic Finance Manager (Pensions)

David Crum - Minerva

Key points raised in the discussion:

1. The Strategic Finance Manager (Pensions) introduced the report which identified the Environmental, Social and Governance (ESG) factors as fundamental to the Fund’s approach as highlighted within the Mission Statement agreed on 7 June 2019.
2. He also noted the Committee’s enhanced focus on Responsible Investment and ESG which were being developed through: the member workshop in November 2019, the sub-group - agreed in December 2019 - which was leading on the development of the Committee’s Core Investment Beliefs and the Fund’s own Responsible Investment Policy in relation to BCPP and other asset managers, the examination of the Spectrum of Capital and finally, the scenario-mapping the Fund’s portfolio in line with the UN’s SDGs. After an invitation to tender in January 2020, Minerva were successful and would lead the scope of work on reviewing the Fund’s investment portfolio holdings and how they align to the SDGs, furthering the commitment to Responsible Investment and ESG.
3. The Representative from Minerva explained that the project by the Fund regarding the UN SDGs was ground-breaking compared to other LGPS funds and the SDGs were a foundation for the UN’s Transforming our world: the 2030 Agenda for Sustainable Development. Minerva’s draft project plan looked at how the Fund’s existing investment managers viewed sustainability through their policies, voting records and holdings, using the World Benchmarking Alliance SDG 2000 index as the proposed framework.
4. Discussing Responsible Investment, the Vice-Chairman commented that a robust and comprehensive process was needed to defend the Fund’s rationale for the current Investment Strategy and the actions to be taken. There was no definitive definition of Responsible Investment so the Fund created its own based on the SDGs and the difficulty was the practicality of the project in which Minerva would help to translate the Fund’s general beliefs on Responsible Investment into more specific ones.
5. A Member was pleased that BCPP’s relationship with Responsible Investment was being examined, especially as the Fund were in the process of pooling with them and it was a good opportunity for the Fund to develop its own Responsible Investment Policy. In response, the Strategic Finance Manager (Pensions) noted the consultations with BCPP’s Responsible Investment lead. The Chairman added that the Surrey Fund was one eleventh within the BCPP providing it with considerable influence, operating through the BCPP Joint Committee.
6. A Member welcomed the enhanced focus on ESG and Responsible Investment covering a breadth of issues and the objective and transparent development of the Fund’s investment strategy going forward.
7. The Vice-Chairman stressed that once the Fund’s future investment strategy was clarified, the rules of engagement for the third parties needed to be established. 

RESOLVED:

1. The Committee noted the report.
2. Approved the draft project plan from Minerva.         

Actions/further information to be provided:

The Committee will help develop the rules of engagement for the third parties in relation to the Fund’s future investment strategy, in line with its commitment to Responsible Investment through ESG and the UN’s SDGs.