Agenda item

The minutes of the Pension Board will be circulated once approved.

Helen Price, Brunel Pension Partnership addressed the Committee and gave a presentation on Responsible Investment. A copy of the presentation is attached as an online appendix to these minutes, a summary is set out below.

She said that she felt that the Partnership had come a long way in the past four years and had now been identified as a leader in the work of addressing Climate Change by winning Pension Fund of the Year for 2020 in the Environmental Finance – Sustainable Investment Awards.

Brunel’s approach to Responsible Investment

To deliver stronger investment returns over the long term, protecting our clients’ interests through contributing to a more sustainable and resilient financial system, which supports sustainable economic growth and a thriving society.

This would be achieved through the three pillars of Responsible Investment.

·  Integration

·  Collaboration

·  Transparency

Climate beliefs

We believe that:

·  Climate change presents asystemic and material riskto the ecological, societal and financial stability of every economy and country on the planet, and therefore will impact our Clients, their beneficiaries and all portfolios holdings.

·  Investing to support the Paris goals that deliver a below 2C°temperature increase is entirely consistent withsecuring long-term financial returnsand is aligned with the best long-term interests of our clients.

·  For society to achieve a net-zero carbon future by 2050 (or before) requires systemic change in the investment industry, and equipping and empowering our Clients (and other investors) is central to this change.

Brunel’s Climate Change Policy

Integrating climate risk and opportunities in all we do

·  Engaging on public policy – making markets work

·  Portfolio design – Investing where it matters

·  Manager selection & monitoring – Designing climate transition solutions

·  Engaging with companies – Convincing others to change

·  Positive investment – Delivering and evidencing progress

Net Zero

·  Net Zero for financed emissions (investments) by 2050, or before.

·  Net Zero on operational emission by 2030, or before

Engagement by Brunel – Banks

·  Brunel co-filed a shareholder resolution at Barclays in December 2019. The first ever shareholder climate resolution at a major European bank

·  In 2020 Brunel co-filed a climate resolution at HSBC, Europe’s second largest financier of fossil fuels

·  Joined IIGCC Banking Sector Workstream - Aligning the Banking Sector with the Goals of the Paris Agreement

Climate Stocktake

The purpose of the climate stocktake is to review Brunel’s approach to managing climate risk. It will seek to address the following questions:

·  Did we deliver on our overall Climate Policy objectives –Was it effective? Was it efficient?

·  Does it meet clients and beneficiaries’ expectations and needs?

·  Is it best practice? What do third party assessments e.g. EY and Principles for Responsible Investment tell us about any current or future gaps?  Where are there opportunities for further leadership?

·  How does our current approach stack up in light of new research and evidence? Are there outcomes of the Net Zero Investment Framework, International Panel on Climate Change or International Energy Agency (IEA) Net Zero Road map that need to be reflected in our approach going forward?

·  Is the way our various asset managers are addressing climate risk, in the context of their mandates, consistent with our policy?  Do we have any concerns?

·  Are there any specific holdings that are cause for concern?  Companies that not responding to engagement?

November 2021: COP26

November 2021: Stocktake process starts

December –September 2022

•Public policy achievements review

•Stakeholder engagement

May/ October 2022: Client workshops

November 2022: Stocktake complete

January 2023: Updated climate change policy

Cyber Security

·  Alphabet - has published a set of principles to promote the responsible use of AI

·  Netease – published its ESG report in June 2020 and included data privacy and protection, and GDPR compliance

·  Baidu – put in place robust corporate structure and measures to protect the privacy of users’ data

Diversity

Diversity Charter - This is a commitment by signatory firms to work together to build an investment industry which represents a more balanced and fair representation of diverse societies.

·  Who has the responsibility and oversight for the diversity strategy and targets? If there are no targets, explain why?

·  How do you ensure you operate an equal opportunity development and promotion process?

·  How are you fostering inclusivity? Do you undertake staff surveys, ensure policies are accessible?

Shirley Marsh-Hughes commented that some companies within the Emerging Markets may find the issue of climate change difficult to address.

Helen Price replied that across all portfolios they would look to use their Transition Pathway Initiative Manager ratings to identify companies that we need to engage with. She added that they need to be mindful of local policies whilst seeking further disclosure / progress.

Councillor Steve Pearce asked if there was any opportunity to produce impact investment vehicles for addressing climate change issues.

Chris Crozier, Brunel replied that finding a consistent definition of impact was being looked at. He added that they do have some Private Market Portfolios that are impactful in terms of housing and renewable energy vehicles that do offer opportunities. He said that they would be willing to discuss the issue further with local officers.

Councillor Pearce asked if the Committee could receive a report on this issue at some point in the future.

The Group Manager for Funding, Investment & Risk commented that within the Fund there was likely to be a myriad of different opportunities and said that it does have impactful investments.

The Chairman thanked Brunel for the presentation on behalf of the Committee.