Agenda item

The Investments Manager presented the report. She said that the challenge was to integrate responsible investment with the Fund’s strategic investment strategy.

The Chair said that this policy represented a big step forward for the Committee, because hitherto Socially Responsible Investment had been pursued through a small dedicated portfolio, but in future it would be applied across all the Fund’s investments.

Members applied the public interest test to appendices 1, 2 and 3 of the report and passed the following resolution:

Having been satisfied that the public interest would be better served by not disclosing relevant information, the Committee RESOLVES, in accordance with the provisions of section 100(A)(4) of the Local Government Act 1972 (“the Act”), that the public be excluded from the meeting during the discussion of appendices 1-3 of the report for this item because of the likely disclosure of exempt information as defined in paragraphs 3 and 5 of Part 1 of Schedule 12A of the Act as amended.

After returning to open session, the Committee discussed appendix 4 of the report. A Member said that he was disappointed by the draft policy, which seemed simply to be a statement of what the Fund was doing now and not what it intended to do. He did not see that this took the Fund forward. The Head of Business, Finance and Pensions responded that the RI policy is a framework for strategic decision-making in the future to ensure RI risks are addressed within its overall duty to maximise financial returns. The Chair said that the draft policy was written in the present tense, but this did not mean that everything in it was already being done; it was his view that the use of the present tense had a more powerful impact than a statement of future intentions would.

A Member said that the policy was not as strong as he would like. He referred to the first paragraph of the first bullet point at the top of agenda page 110, which stated that the Fund “includes in tenders an assessment of managers’ processes for evaluating responsible investment risks within their investment processes” and said that he considered that it should state that responsible investment was a criterion for the appointment of a manager. He would prefer to state that the Fund would “give priority to those with greater Socially Responsible Investment capacity.” Another Member said that this would encourage investment managers to put pressure on companies to be more socially responsible. However another Member was concerned about the legality of making SRI the main selection criterion. The Strategic Director – Resources agreed; SRI should be a factor to be taken into account when appropriate, but not the main selection criterion. After discussion Members agreed that the following should be added to the end of the first paragraph of the first bullet point on page 110:

“and make use of this as an integral part of the selection process when relevant.”

It was RESOLVED by 6 votes to 3

  i.  To adopt the proposed Responsible Investment Policy included in Appendix 4;

  ii.  To agree the implementation process included in Exempt Appendix 1.