Agenda item

The Fund has a Responsible Investing (RI) Policy in place to address the impact of risks arising from RI issues on the investments portfolio.

The Investments Manager introduced the report to the Committee. He explained that this year the report covers periods to September 2021 as significant RI work was undertaken in 3Q21, including the equity allocation review which saw the Fund adopt two new interim decarbonisation targets as well as a number of strategic asset allocation changes.

He said that the Fund’s RI priorities for 2021/22 have been updated to ensure consistency with Brunel’s seven priority themes as all these topics remain relevant from a strategic perspective to the Fund.

The Committee are asked to agree these priorities:

a) Climate change including pollution, waste and plastics

b) Human capital

c) Diversity and inclusion

d) Cyber security

e) Cost and tax transparency

f) UK policy frameworks

g) Supply chain management

Charles Gerrish said that he had noted the emphasis within the report on the new multifuel facility located in Slough which uses waste as an energy source. He referred to page 106 and asked for continuity on the use of the company names Hermes and EOS between the cover report and the appendices.

The Investments Manager replied that he would make sure that when the Taskforce on Climate-related Financial Disclosures (TCFD) report is published that there is continuity when referring to these companies. He added that the facility in Slough is a Bio-Energy asset and that he would need to refer back to previous documentation to see how has been invested in it.

Shirley Marsh-Hughes commented that the report was comprehensive and easy to read. She suggested whether in future reports the Committee will need to refer to COP 26 more directly.

The Investments Manager replied that it is referred to in the Executive Summary and that a more direct statement could be made within the report.

The Service Director for Financial Control and Pensions added that a good discussion had taken place at the Brunel Oversight Board with regard to COP 26 and that officers would work with Brunel to provide a statement that can be published.

Josh Caughey, Mercer addressed the Committee and highlighted points from within Appendix 3 – Mercer Responsible Investment Total Evaluation (RITE) Analysis.

RITE produces an objective evaluation that can be monitored over time and can provide a comparison relative to peers. It assesses how well you are currently integrating Environmental, Social and Governance (ESG) considerations into your overall decision making.

The assessment covers the four steps of Mercer’s Sustainable Investment Pathway and considers over 75 data points.

RITE Score for Avon

The Fund performed well ahead of similarly sized schemes and other LGPS funds.

·  Total Score: A+

·  Size average: B+

·  LGPS average: B+

Shirley Marsh-Hughes asked if member friendly statements would be required regarding Climate Disclosures.

Josh Caughey replied that they had not seen a need for this yet, but that they will probably develop over time.

The members of the Committee were minded to advise that the following resolutions should be made on Friday 17^th December.

i) Approves the Annual Responsible Investment Report for publication.

ii) Approves the Taskforce on Climate-related Financial Disclosures Report

for publication.

iii) Agrees the RI priorities for 2022/23.