Agenda item

Report of the Director for Corporate Services

The Director for Corporate Services submitted a summary of activity during the quarter by the Fund’s investment managers, in fulfilment of their corporate governance and socially responsible investment obligations, including details of their voting activity on corporate resolutions for companies held in their portfolios.

The Director explained that following the production of the Climate Risk report by LGPS Central Ltd, which was presented to the Pensions Committee in March 2021, Fund Officers had produced a 2021/22 Climate Stewardship Plan. The Plan had been a working document, and the final version detailing the engagement carried out in 2021/22 (attached at Appendix 1 to the report) was presented to the Panel.

The Panel received the new Climate Stewardship Plan for 2022/23 which had been approved by the Pensions Committee, alongside the Fund’s Climate Change Strategy, in February 2022 (Appendix 2 to the report). Engagement activity for 2022/23 would be reported against the 2022/23 Climate Stewardship Plan as part of future RI&E reports to the Panel.

The Director explained that, as the Fund appointed external investment managers, engagement with individual companies was delegated to these managers and the investment managers of pooled funds, in which the Fund also invested (e.g. LGPS Central Funds) and jointly as part of LAPFF. Information on manager engagement and voting was requested routinely, as part of the quarterly reporting the Fund received from each of the managers. In Q1 2022 engagement topics included:

·         Meeting with a Pharmaceutical company to discuss board diversity and inclusivity in the workplace.

·         Meeting with a Telecommunications company to discuss carbon neutrality and targets for reducing Scope 1 and 2 emissions.

·         Writing to Oil companies on emissions reporting and emissions reduction plans.

·         Engaging with policy makers worldwide on Sustainable Green Finance and ESG policies.

·         Engagement with Banks on decarbonisation targets for financing of high emission-sectors.

The Director also submitted the quarterly report of the Local Authority Pension Fund Forum (LAPFF) (Appendix 3 to the report). The Director highlighted an article that focused on investment in Russia from an Environmental (the World’s reliance in fossil fuels), Social (Sanctions and Human Rights aspect of the invasion) and Governance (Russian Government unable to operate within the framework of the law) point of view.

The Panel received the LGPS Central Ltd Annual Stewardship Report for 2021 (Appendix 4 to the report). This report had been produced instead of the usual Quarterly Stewardship Report in Quarter 4 2021 and was a wider document which would also be used as evidence to support the Company’s Statement of Compliance with the UK Stewardship Code.

The Panel also received the LGPS Central Ltd Quarterly Stewardship Report Q1 2022 (Appendix 5 to the report). This report highlighted the work LGPS Central and its appointed voting and engagement partners did in engaging with organisations on behalf of the eight Partner Funds.

In response to a question from Cllr Greatorex relating to a reference to the 30% Club, it was confirmed that it referred to the aim of achieving a minimum of 30% female representation on the Boards of FTSE100 companies and was established in 2010 to promote diversity within Boards.

RESOLVED - That the content of the Responsible Investment (RI) report, including the final 2021/22 Climate Stewardship Plan (Appendix 1), the 2022/23 Climate Stewardship Plan (Appendix 2), the Local Authority Pension Fund Forum (LAPFF) Quarterly Engagement Report (Appendix 3) and the LGPS Central Annual Stewardship Report 2021 and Quarterly Stewardship Update (Appendix 4 and 5), be noted.