Agenda item


The Fund’s Responsible Investment (RI) policy takes an ‘engagement with consequences’ approach to responsible investment issues. A key element of this approach is the escalation policy if issues persist. As this engagement is delegated to the investment managers, the Committee asked Border to Coast Pensions Partnership, BCPP, to present some case studies showing this process in action. Investment managers were also asked to provide data showing the underlying exposure to the largest fossil fuel companies and engagement approaches.  




Lloyd Whitworth, Head of Investment & Stewardship

Sandy Dickson & Jon Cross, Mercer

Jane Firth, Border to Coast


Key points raised during the discussion:


1.    The Head of Investment & Stewardship introduced the report by explaining the two parts contained therein. The first was in response to requests from the Committee to have a discussion on some engagement case studies, and the second was in response to the question about the Fund’s exposure to the 25 largest oil and gas companies globally.

2.    Jane Firth highlighted the following elements of the report:

  • The escalation process as part of Border to Coast RI policy.
  • Voting guidelines had been strengthened and now included banks as part of the policy.
  • Examples of what Border to Coast were doing on Surrey’s behalf by monitoring the managers of listed assets. With regards to alternatives, a similar approach was adopted. They were also involved in developing the ESG questionnaire as part of initial due diligence.
  • She explained that collaborating with other investors gave more influence and had a greater impact.
  • She noted that modern slavery was part of the social key priority theme. This was supported by joining with Royal London Asset Management (RLAM) and other investors. This included voting against companies where they were not complying to the Modern Slavery Act section 54.
  • Of the 12 companies engaged with, 11 were compliant.  The one company that wasn’t would be on the watch list ahead of the AGM season next year.

3.    A Member questioned whether there was a need to re-evaluate whether it was fiducially responsible to be invested in any of these fossil fuel companies especially for the big 25 and whether it was time to acknowledge the fact that engagement was clearly not going to work in changing their approach and if so, to look at divestment.

4.    A Member gave reasons for divestment from the fossil fuel companies as:

  • the impact of divestment from them would be very small as the weightings of those assets was very small
  • there was a level of futility in engaging with companies whose principal purpose was fossil fuel production
  • those companies could risk becoming stranded assets very rapidly.

5.    Steve Williams therefore proposed a motion to change the word ‘to note the underlying exposure’ in the second recommendation to read ‘to take steps to eliminate the underlying exposure to these assets classes’.  This was seconded by George Potter.

6.    A few Members spoke not supporting the motion and would prefer to make an informed and considered decision and therefore discuss in June 2024 in line with the review of the RI policy.

7.    There was much discussion on this before George Potter made a further motion to retain recommendations one and two but to add a third to read ‘it is recommended that the committee ask officers to include as part of the RI Annual Review in June, an assessment of the implications and impact of the exclusion of investment in the largest 25 fossil fuel companies.’  This was seconded by Steve Williams who withdrew his original motion. Following a vote, the motion was carried.


Actions/ further information to be provided:





1.    That the engagement case studies presented by BCPP be noted.

2.    That the underlying exposure to the largest 25 fossil fuel companies within the global equity mandates and the engagement approaches by BCPP, Legal & General Investment Management (LGIM) and Newton Investment Management be noted.

3.    That officers be requested to include as part of the RI Annual Review in June 2024 an assessment of the implications and impact of the exclusion of investment in the largest 25 fossil fuel companies.


1.26pm the Committee took a comfort break and reconvened at 1.38pm


Supporting documents: