Agenda item

To receive questions or statements on the business of the committee from town and parish councils and members of the public.

The public questions together with the responses from the Chairman of the Committee are set out in the Appendix to the minutes.

The following statement was read by the Chairman:

“We have received a large number of questions from members of the public regarding the pension fund’s approach to investments in fossil fuels and we welcome the interest in this important topic.  Written responses to each of the questions will be published alongside the minutes of this meeting but I would like to make this statement today.

This topic was discussed at length at our meeting in September 2020.  The reports, minutes and a recording of those discussions are all available on the Council’s website. 

I would like to remind everyone that the purpose of the pension fund is to pay benefits to scheme members and that the Committee has a duty to scheme members and their employers to ensure that their contributions to the fund are invested appropriately to make returns sufficient to meet those obligations. This duty overrides any other considerations.

The approach agreed by the Committee in September 2020 was not to divest completely from companies involved in the sourcing and refining of fossil fuels, instead we will seek to reduce investment in all high carbon emitting companies and to influence the demand for fossil fuels and their financing, not just their supply.

The decision was based upon evidence presented to the Committee by independent investment consultants, Mercer, that a strategy of decarbonisation can deliver significantly greater reductions in the ‘carbon footprint’ of investments than can be achieved by divestment. Divestment is effectively a transfer of ownership that does not directly lead to a reduction in either the supply or demand for fossil fuels but it does remove the opportunity to influence companies by working with them to transition to a lower carbon future.  I would like to add, however, that targeted divestment remains an option from individual companies who will not positively engage.

Significant decarbonisation has been and will continue to be achieved through the transition of assets to the management of Brunel Pension Partnership, the pension fund’s LGPS investment pooling manager.  10% of the pension fund’s assets are now invested in Brunel’s global sustainable equities fund, which is 20% of our total equities and is the fund’s largest single investment.  All other actively managed Brunel funds are committed to a policy of a 7% year on year reduction in their carbon footprint.

Brunel’s quarterly reports considered by the Committee and publicly available include summaries of the carbon intensity and extractive exposure of all the funds we are invested in compared to industry benchmarks.  Brunel are widely recognised as a ‘market leader’ within this field and their website includes details of the underlying investments of all its funds plus a wealth of information relating to its engagement activities with companies, including voting records.

In 2022 Brunel will complete a ‘stock take’ of their approach to engagement and divestment. If this review concludes that companies are not taking appropriate action and sufficient steps to manage climate risks and to enable alignment with the Paris Climate Agreement then the Committee will need to reconsider its approach too.”