Agenda item

This report is a summary of various Environmental, Social & Governance (ESG) engagement and voting issues that the Surrey Pension Fund (the Fund), Local Authority Pension Fund Forum (LAPFF), Robeco, and Border to Coast Pensions Partnership (BCPP) have been involved in, for the attention of the Pension Fund Committee.

Speakers:

Lloyd Whitworth, Head of Investment & Stewardship

Neil Mason, LGPS Senior Officer

Jane Firth, Border to Coast

Key points raised during the discussion:

1.    The Head of Investment & Stewardship gave a brief summary of the report and highlighted the new chart that split out the engagement of the LAPFF by the SDG's, as well as SDG15 relating to life on land. He noted that LAPFF had made a first step in joining a nature action 100 group.

2.    In response to a Member query the Head of Investment & Stewardship confirmed that the Fund had no exposure to UK water companies.  That Member then went on to express caution in any future investment in water companies because of the environmental risks of dumping sewage.

3.    A Member asked whether religious factors were relevant in engagement. The Head of Investment & Stewardship explained that it was neither fund management partners nor the LAPFF that carried out such engagement. He added that whilst we have historically been asked about Sharia law in terms of our Fund, there was no separate mandate on that basis. The LGPS Senior Officer added that the Scheme Advisory Board, being the overall governing body for the LGPS, had consulted with an Islamic cleric and, while we await formal advice, it was his understanding that the LGPS is classified as Sharia compliant.

4.     A Member asked if Border to Coast would consider and evaluate their approach to managing and evaluating risk in light of climate and sustainability considerations which would be subject to quite considerable change over the next 5-10 years. He thought that any insurer that doesn't move with the times in this regard could easily to be caught out and landed with some quite significant liabilities.  Jane Firth responded that the engagement described in the report was through LAPFF, but Robeco had separate engagements with financial companies.  She was unable to say if there were any insurance companies included but there were some big banks and agreed that there was a regulatory risk, and she would pick this up with Robeco.  Jane Firth also stated that she would find out from LAPFF if this work in this area was included in their engagement and, if not, would raise this as part of the annual input into their work plan.

5.    There were queries and discussion around the engagement process and the Committee not being informed of results of engagement, particularly around investment managers, and therefore what was the point of including this in the RI Policy?  Jane Firth confirmed that if engagements failed that the policy ultimately allowed for companies to go into an exclusion list.

Actions/ further information to be provided:

Feedback from Border to Coast on engagement with insurance companies.

Resolved:

1.    That the ESG Factors were reaffirmed as fundamental to the Fund’s approach, consistent with the RI Policy through:

a)    Continuing to enhance its own RI approach and SDG alignment.

b)    Acknowledging the outcomes achieved for quarter ended 30 September 2023 by LAPFF and Robeco through their engagement.

c)    Note the voting by the Fund in the quarter ended 30 September 2023.