Agenda item

This paper provides details of the progress made in developing the Surrey Pension Fund’s (the Fund’s) standalone Responsible Investment (RI) Policy.

Witnesses:

Neil Mason, LGPS Senior Officer

Lloyd Whitworth, Head of Investment & Stewardship

Mel Butler, Investment Strategy Manager

Amanda Jupp, Communications and Training Manager

Key points raised during the discussion:

1.    The Head of Investment & Stewardship introduced the report and provided a brief summary. Officers noted the consultation had started in the previous week and would run for six weeks and complete on 23 October 2022. Around 110,000 people were being engaged by email. Full details would be found in the supplementary agenda published on 24 September 2022.

2.    Members noted that the Responsible Investment Policy was approved at the Pension Fund Committee meeting of 17 June 2022, subject to consultation.

3.    Cllr Wlliams stated the launch of the consultation was inappropriate as it should have been brought to the Committee prior to launch. The Member further stated there were a number of points related to the process, and the questions being asked within the consultation needed to be raised, and further stressed the consultation had started without the approval of the Committee.

4.    In regard to the report’s recommendations, Cllr Potter said they believed the recommendations had been changed from when the report was previously published prior to the original meeting being postponed.

5.    A Member of the Committee said that the committee had previously approved the Responsible Investment Policy of 17 June 2022, subject to consultation, however the format of the consultation was not approved.

6.    Cllr Hughes stated they felt the consultation should be constructed by experts rather than Members of the Committee and officers had carried out the consultation as previously agreed by the Committee.

7.    Cllr Potter said it was good practice for the relevant committee to receive a copy of a consultation prior to publication.

8.    Cllr Potter sated it was inappropriate that internal email updates had been paused out of respect for the death of Her Majesty The Queen, however the consultation still continued to be published during the period of mourning. The Member suggested that the consultation be paused to allow the committee to discuss it properly. The Chairman responded there was pressure to publish the consultation and it was understood that, during the period of mourning, certain business-as-usual should continue.

9.    Cllr Williams said that the Committee had previously agreed the nature of the Responsible Investment Policy to be consulted on, not the consultation itself, and it was assumed that the consultation process would still be approved by the Committee. The Member further stated that they believed the consultation should be paused to allow for further discussion.

10.  The Chairman stated that he felt the consultation had been published in line with what was previously agreed. Officers had also consulted with and gained approval from the Chair and Vice-Chair regarding the consultation process, further to receiving expert advice from their engagement advisors, Minerva, and the Council’s internal team changed with ensuring that consultations are carried out effectively and compliantly.

11.  The LGPS Senior Officer explained that the Chairman was consulted and advice was sought from senior officers in the organisation as to whether the substantive work could progress during the period of mourning. The LGPS Senior Officer further said he was prepared to take criticism on whether the consultation should have been launched during the period of mourning and that this was something officers would take on board.

12.  Cllr Potter reiterated their view that it was inappropriate to launch the consultation and stressed that, at the very least, the consultation should be extended.

13.  In regard to the consultation itself, Members made the following comments:

a.    Cllr Williams stated that clarification was needed on whether there would be any direct consultation or sessions with key stakeholders such as the borough and district councils. The Chairman confirmed there were no plans for a meeting with borough and district councils on this. The Member reiterated a meeting with the councils should be incorporated into the consultation process. Another Member of the Committee agreed it would be worthwhile to have a specific engagement activity with the employers, in particular, with the borough and district councils.

b.    Cllr Williams said that a question related to whether the consultee believed the Surrey Pension Fund should take immediate steps to divest from fossil fuels should have been included within the consultation.

c.     Cllr Williams said that that a question should have been included within the consultation related to the point in which the consultee believed the Surrey Pension Fund should become a net-zero carbon fund. 2030, 2035, 2040 or 2050.

d.    In regard to Question I of the consultation, related to the ‘engagement with Consequences’ approach, Cllr Potter said that a question was needed on whether divestment action should be taken in specific areas in order for  Question I to be worthwhile.

e.    Cllr Potter said that research suggested ‘agree’ or ‘disagree’ questions within a consultation were loaded questions.

f.      In regard to Question H of the consultation, related to climate risk, Cllr Potter said that there were no questions included on what net-zero should look like and what the timescale should be and so Question H was not worthwhile.

g.    Cllr Potter said that Question H and Question I were useless unless the wording was amended. Therefore the Members stated the consultation should be amended or relaunched.

h.    That every question within the consultation should include a comment’s box to allow the consultee to provide detail on their reasons for agreeing or disagreeing.

14.  The Chairman stated creating a consultation was complicated and officers took best advice from the experts and that the consultation questions closely followed the draft Responsible Investment policy.

15.  Cllr Williams reiterated it would be reasonable to hold a consultation meeting with representatives from employers and a representative of their employees.

16.  Cllr Tear said it was a reasonable suggestion to extend the consultation, however a relaunch may confuse consultees and negatively impact the number of responses received.

17.  Cllr Potter suggested that, in the event the consultation was not restarted, supplementary questions covering additional topics on what net-zero means for the consultee and timescales around this, should be included. The Chairman stated the Responsible Investment policy did not include a target date for net-zero and so it would not be appropriate to include a question on it within the consultation. Cllr Potter said that the policy would develop this and therefore it would be legitimate to include a question on it.

18.  Cllr Potter reiterated that ‘agree’ and ‘disagree’ questions within consultations were not best practice.

19.  Cllr Williams proposed the consultation was restarted. In response, another member of the committee raised concerns that a restart of the consultation could cause confusion and potentially bias the results.

20.  The committee discussed the option of extending the consultation by two weeks. During the discussion, Cllr Hogg stated it would also be valuable to circulate a reminder to consultees to complete the consultation.

21.  Cllr Potter stated that, as restarting the consultation was not a popular decision on the committee, he would suggest extending the consultation and circulating a reminder, but stressed there was a need to include a supplementary question related to net-zero and divestment.

22.  Cllr Williams whether a two week extension was a suitable time period to circulate a consultation with supplementary questions and to organise a stakeholder meeting to consult employers directly. The Member further stated he did not believe a two week extension to be suitable and therefore a consultation relaunch was necessary. The LGPS Senior Officer stated he needed to discuss with colleagues the impact of a consultation extension.

23.  The Chairman stated he supported a two week extension and circulation of a consultation reminder but did not support the addition of a supplementary question on net-zero. The reason for this is because there was a need to develop a view of net-zero before consulting on the topic. Following further discussion, the Chairman assured Members the committee would debate a topic on a net-zero target date when appropriate.

24.  Cllr Williams moved a motion, seconded by Cllr Potter, to restart the consultation, and to include a question on net-zero as previously discussed. It was agreed to hold a recorded vote. Steve Williams and George Potter voted For the proposal. Nick Harrison, Trefor Hogg, David Harmer and Robert Hughes voted Against the proposal. There were no Abstentions. Therefore the motion was lost.

25.  The Chairman moved a motion to extend the consultation by two weeks, to circulate a reminder to consultees to complete the consultation, to note a possibility of an extra committee meeting to take the consultation extension into account, and, following reaching a conclusion on net-zero, to consider whether a consultation was necessary. It was agreed to hold a recorded vote. Steve Williams, George Potter, Nick Harrison, Trefor Hogg, David Harmer and Robert Hughes voted For the motion therefore it was unanimously carried.

Actions/ further information to be provided

Action A6/22 - To extend the consultation by two weeks, to circulate a reminder to consultees to complete the consultation, to note a possibility of an extra committee meeting to take the consultation extension into account, and, following reaching a conclusion on net-zero, to consider whether a consultation was necessary.

Resolved:

It was agreed to extend the consultation by two weeks, to circulate a reminder to consultees to complete the consultation, to note a possibility of an extra committee meeting to take the consultation extension into account, and, following reaching a conclusion on net-zero, to consider whether a consultation was necessary.