Agenda item

Report of the Director for Corporate Services

The Deputy Chief Executive & 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. This includes the Responsible Investment (RI) report, including the Climate Stewardship Plan for 2022/23, the Local Authority Pension Fund Forum (LAPFF) Quarterly Engagement Report and the LGPSC Quarterly Stewardship Update.

Panel members were informed that the Stewardship report to comply with the UK Stewardship Code of 2020 was currently being developed. The aim was to have this developed ready for approval at the Pensions Committee meeting in March 2023, so it could be formally submitted to the UK Stewardship Code for sign-off and approval.

The Director highlighted the Climate Change Roadmap as part of the Climate Change Strategy for which the Fund’s carbon metrics would be remeasured at the end of September. It was anticipated that the decision to invest 10% of the Fund into the Legal and General Low Carbon Transition Fund (LCTF) would have a positive impact on the Fund’s requirement to reduce its carbon footprint.

Panel members were presented with the updated Climate Stewardship Plan (CSP) attached to the report at Appendix 1. The CSP working document would be updated for engagement activity carried out throughout 2022/23 with progress reported quarterly. The Director informed the Panel that Officers were engaging with the Fund’s Investment Managers independently to facilitate engagement that needed to be undertaken, not only on climate stewardship but also to understand more about other engagement themes that the managers might be looking at.

The Director highlighted some key engagement activities that had taken place in Q2. These included:

·         Engagement with Shell by JPMorgan and LGPS Central as part of the Climate Action 100+ Group.

·         Discussing working conditions of employees in Mexico and Co2 emissions with a technology company.

·         An escalated engagement with cruise operator Carnival PLC, who pay many employees less than a living wage.

The Director also submitted the quarterly report of the Local Authority Pension Fund Forum (LAPFF) attached at Appendix 2 to the report. This report highlighted the work LAPFF does in engaging with organisations on behalf of its members. Examples of engagement from the last quarter included:

·         The Human Rights initiative which involved a visit from the Chair of the LAPFF to communities affected by the Mariana and Brumadinho tailings dam collapses in Brazil.

·         Meeting with BMW and Mercedes over their approach to decarbonising their vehicles.

·         Joining a collaborative call with Nestle around plastic packaging.

·         Meeting with the Chair of Severn Trent Water, who outlined their commitment to reducing pollution and the release of sewage into waterways.

Finally, the Panel received the LGPS Central Ltd Quarterly Stewardship Report Q1 2022 at Appendix 3 to the report. This report highlighted the work LGPS Central and its appointed voting and engagement partners do in engaging with organisations on behalf of the eight Partner Funds. The Director highlighted that LGPSC had recently developed a Modern Slavery Policy. As a result LGPSC had been directed to the SCC Modern Slavery Policy and had been asked to amend their policy slightly so that it included reference to the policies of the Partner Funds.

Resolved - That the content of the Responsible Investment (RI) report, including the Climate Stewardship Plan (Appendix 1), Local Authority Pension Fund Forum (LAPFF) Quarterly Engagement Report (Appendix 2) and the LGPS Central Ltd Quarterly Stewardship Report (Appendix 3), be noted.