Agenda item

Border to Coast Pensions Partnership (BCPP) is now an established fully regulated asset management company when the authorised contractual scheme (ACS) went “live” on 26 July 2018. The Surrey Pension Fund started transitioning assets in quarter four of 2018 and continues this through 2022. This paper provides the Pension Fund Committee (Committee) with an update of current activity being undertaken by the Border to Coast Pensions Partnership (BCPP).

Witnesses:

Neil Mason, LGPS Senior Officer

Milo Kerr, Border to Coast

Key points raised during the discussion:

1.    The LGPS Senior Officer introduced the report and highlighted that Recommendation 4b should state the BCPP Joint Committee meeting of 30 November 2022. The officer further highlighted and noted details of the revised responsible investment policy, the changes to the voting guidelines, changes to the climate change policy and detail on approvals for changes to the governing documents

2.    Cllr Harmer asked for clarification on the terms ‘thermal coal’ and ‘oil sands’. The representative from Board to Coast explained that thermal coal was commonly referred to as ‘dirty fossil fuels’ and was used for energy production. Oil sands was for the use of oil for energy production.

3.    In regard to thermal coal and oil sands, Cllr Potter noted the decrease in the revenue threshold to 70% for public markets but did not understand the lower threshold of 25% for private markets as he expected both private and public to be at the same percentage rate. The representative from Border to Coast highlighted that as the world progressed to a lower carbon position it was expected for the use of oil and coal to reduce, and while it was set for 70% for public markets today, it was expected to strengthen over the coming years. The biggest difference between public and private markets in this respect was that private markets capital was locked in for a longer period of time and therefore it was believed that a stronger threshold was needed. Cllr Potter stated that he did not see the logic in that strategy as Border to Coast were adopting a policy to move away from the market and so the threshold should be stricter.

4.    Cllr Williams stated that there were reasons, other than for climate purposes,  to consider withdrawing from investment in fossil fuels altogether.

5.    Cllr King asked if a policy was in development related to the removal of existing carbon emissions from the atmosphere. The representative from Border to Coast highlighted that the Climate Opportunities fund had a target allocation to forestry as a means of positive carbon removal.

6.    Members noted that there had been a focus on cluster munitions due to a focus from the United Nations.

7.    The LGPS Senior Officer highlighted details of Recommendation 3a and 3b.

8.    The Chairman highlighted Recommendation 1 and stated that the Surrey Pension Fund was continuing to work on its own RI Voting Policy, and that it may come to a point where there were inconsistencies between BCPP’s policy and the Surrey Pension Fund’s policy.

9.    Cllr Potter proposed that Recommendation 1 was changed from ‘supported’ to ‘noted’. Cllr Turner and Cllr Harmer supported the proposal. The Committee agreed to amend Recommendation 1 to ‘noted;.

Actions/ further information to be provided:

None.

Resolved:

The Committee:

1. Noted the revised Border to Coast Responsible Investment (RI) Policy2023, Climate Policy 2023 and Corporate Governance & Voting Guidelines 2023, subject to the continuing work between the Fund and Border to Coast to align our approaches consistent with the Fund’s standalone RI Policy, Voting Policy and commensurate with feedback from the Fund, as set out in paragraph 18.
2. Approved the proposed changes to the Stakeholder agreement, Articles of Association and Inter Authority Agreement outlined in this report and recommends approval by full Council.

3. Recommended to full Council that all future decisions in respect of BCPP matters are delegated in the following way:

a)  Inter authority agreement matters (joint committee) – to the Pension Fund Committee

b)  Articles of Association and shareholder agreement matters – to the shareholder representative (the Section 151 officer or their delegate, in consultation with the Chair of the Pension Fund Committee).

4. Noted the background and progress of BCPP activity, including details of the following:

a)    Schedule of activity since the last Committee meeting of 23 September 2022 until the end of the calendar year.

b)    BCPP Joint Committee (JC) meeting of 30 November 2022.