Agenda item - INTERIM INVESTMENT STRATEGY STATEMENT

Agenda item

INTERIM INVESTMENT STRATEGY STATEMENT

To receive an Interim Investment Strategy Statement from BolaTobun.

 

 

Minutes:

The Pensions & Treasury Finance Manager introduced this item she spoke to the report which set out a revised timetable for the development of the Fund’s 2020 Investment Strategy following the 2019 actuarial valuation.

 

She highlighted the Investment Strategy Review Timetable shown at Appendix Y of the report.

 

It was noted that one of the proposals was to consider and approve that the fund reduce its total equity portfolio relative exposure to future emissions from fossil fuel reserves (measured in MtCO2e – million tonnes of CO2 emissions) by 50% in over the next 5 years (September 2025).

 

Councillor Taylor asked why it was decided to use the targets 50% in 5 years? How was this set of metrics arrived at?

The Pensions & Treasury Finance Manager said it takes time for levels to be reached, for example the LB Hackney have been going through a similar change and after a 3 year period an audit showed that a 40% reduction had been achieved.

She said she thought the targets proposed were achievable and a table could be prepared for the next meeting to show how various funds are progressing. Some local authorities had looked to make similar changes but had not been able to reach the zero- carbon target they had hoped for.

 

Following discussions, it was agreed that there was a need to determine whether targets /timeframe were reasonable and if targets were ‘stretching enough’

 

Councillor Neville said any costs to the fund to enable ESG targets to be met should be clearly set out. It was noted that our ‘investment beliefs’ were still under discussion. He asked if there were any other material changes to the statement apart from ESG issues and had they been run by AON. It was noted this had not happened as it was an interim report.

 

The Chair summarised that this is a strategy and not a map, we would need to have an understanding of the costs involved when we modify the portfolio. The ESG is informing our decision in the same way that a portfolio switch would do between classes, it is difficult to show this until we make the changes.

These could be considered to be arbitrary targets, we need to have a review mechanism – reviewed on a six- monthly basis by the Committee and giving costs involved.  Comparability figures for other funds and schemes should be provided to help in this process.

 

AGREED

1)    Noted the timetable for development of the 2020 investment strategy attached as Appendix Y to the report:

2)    That the fund reduce its total equity portfolio relative exposure to future emissions from fossil fuel reserves (measured in MtCO2e – million tonnes of CO2 emissions) by 50% in over the next 5 years. (September 2025);

3)    To approve the fund measure the reduction relative to the Fund’s total equity portfolio position as at 30 September 2019 and adjusted for Assets Under Management (£AUM);

4)    To approve the interim Investment Strategy Statement (ISS) attached as Appendix Z of the report

5)    Targets would be reviewed at the next Pension Policy & Investment Committee meeting in September using comparability to other funds and schemes. Targets would thereafter be reviewed on a six- monthly basis by the Committee.

 

Supporting documents: