Agenda item

Consider report by Director, Finance and Corporate Governance. (Copy attached.)

9.1       With reference to paragraph 8 of the Minute of the meeting held on 17 March 2022 there had been circulated copies of a report by the Director, Finance and Corporate Governance which sought approval for the responsible investment objective and metrics for the Pension fund in line with the Fund’s Responsible Investment Policy.  As part of the Pension Fund’s Fiduciary duties it was required to ensure appropriate consideration was given to Environmental, Social and Governance (ESG) issues as part of its investment decisions, whilst acting in the best interests of the scheme beneficiaries. The Committee and Board, to ensure those fiduciary duties are met, and in line with good practice approved a revised Responsible Investment Policy on 16 September 2021.  The revised policy stated that the Committee would seek to monitor key ESG metrics and set targets based on their views and how key metrics evolved over time.  The Fund undertook an initial survey which was followed by a workshop which highlighted the challenges around the availability of data to allow some of the SDG’s to be measured in a reliable and robust way.  Due to existing reporting requirements, the Task Force for Climate Related Financial Disclosure and Paris Aligned SDG’s relating to climate were the most developed.  The Committee had approved the 6 key SDG’s as priorities.  Those were SDG 134 – Climate Change, SDG 7 – Affordable and Clean Energy, SDG 1 – No Poverty, SDG 2 –Zero Hunger, SDG 3 – Good Health and Well-being and SDG 1- Reduce Inequalities.  Appendix 1 to the report detailed the action plan for the commencement of data gathering and reporting for priorities SDG 13 Climate Change and SDG 7 Affordable and Clean Energy. This would allow a baseline position to be established and to ensure the Fund met its agreed responsible investment monitoring requirements and TCFD reporting when required. 

9.2       Mr Andrew Singh of Isio summarised the report and responded to Members questions.  Mr Singh explained that ESG issues were widely seen as material risks for pension funds, and that climate change, and social risks were increasingly considered in the same way as financial risks.  In response to a question regarding added bureaucracy related to climate impact issues, Mr Singh explained that the impact from setting or not setting climate goals could be extremely significant, that climate change was the focus of attention for good and obvious reasons and that other ESG aspects were likely to be subject to considerable focus in the future.  Ms Robb added that the monitoring of ESG matters would be reliant on good communication with fund managers and was something that needed to be managed into the future.  In response to a question regarding whether the war in Ukraine had led to increased focus on the Social and Governance aspects of ESG, Mr Singh agreed that the war had brought more attention to Social and Governance issues and explained that the war had resulted in equity markets moving out of Russian holdings.

DECISION

NOTED the action plan detailed in Appendix 1 to the report.