To receive a presentation from Karen Shackleton (Pensions for Purpose).
Minutes:
Councillor Leaver introduced the item on responsible sustainable and impact investment saying that the Committee was looking at this topic in response to the recommendation in the motion agreed at full Council on 10 July 2019 that:
“The Pensions Policy and Investment should continue to play its part in reducing carbon and mitigating its affects by looking in consultation with pension beneficiaries, to invest in assets which contribute to a decarbonised economy: including divesting from assets, in a manged way, which do not contribute to meeting the objectives”
1. Presentation
The Committee received a presentation from Karen Shackleton, the founder of Pensions for Purpose, on Ethical, Sustainable and Impact Investing.
The presentation included information on the following:
· The Spectrum of Capital (1-8 on a scale from traditional to philanthropy)
· Moving from Traditional to responsible (1-2 on the Spectrum of Capital)
· How do Managers do this for you
· Moving from value investing to values investing
· Sustainable investing (3 on the spectrum of capital)
· What do sustainable portfolio’s look like?
· Divesting v Decarbonising – which is best?
· Investing with Impact (3 to 4+ on the spectrum of capital)
· Impact Investment – what is it?
· The financials of impact investment
· What do listed impact investments look like?
· What do unlisted impact investments look like?
· A typical pension fund’s journey to impact investment
· Impact measurement
2. Questions/Comments from Councillors
2.1 Trade unions had a role in asking questions of fund managers.
2.2 There was a hierarchy of debts – some funds did make money from distressed debts.
2.3 There were different ways of approaching ESG issues. Divesting means removing all investments from Carbon funds but this can also have unintended consequences. Decarbonisation was a more holistic approach, capturing a direction of travel rather than excluding things all at once. There were other polluting industries such as shipping and fashion which also need to be taken into account when making investment decisions.
2.4 The first stage in looking at this should be to discuss and agree on some investment beliefs. From this a policy can be developed and an agreement made on how to implement the policy.
2.5 The Pension Fund trustees will have to consider what can be done and what it is appropriate to do.
2.6 There is a shortage of quality investment vehicles at the moment. Some fund managers are better than others in these areas. But this has changed over the past two years and the situation is continuing to develop as more and more people are becoming interested in the investment areas. The industry is working to catch up with the changing environment.
2.7 There is also a need to separate out the environmental, social and governance issues.
2.8 AON track investment vehicles and give them a score based on the integration of their policies and their implementation.
2.9 In the impact area there are currently a few small niche boutique suppliers.
2.10 The way to make changes is to work with other local authorities.
2.11 The LCIV is holding a seminar in September on ESG issues.
2.12 At Islington it took three meetings of their pension committee to change their position on ESG.