Agenda and minutes

No apologies for absence were received at the meeting.

Members are invited to declare at this stage of the meeting, the nature and existence of any relevant disclosable pecuniary or personal interests in the items on this agenda and to specify the item(s) to which they relate.

Councillor Johnson declared a personal interest as a member of the Brent Pension Fund Scheme and also as a Governor of Chalkhill Primary School who were an employer member of the scheme.

Councillor Crabb declared a personal interest in relation to Agenda Item 7 (Implementation of Infrastructure allocation) as a Non-Executive Director of Smart Energy GP given the reference included to the renewable energy market within the investment approach outlined.

To approve the minutes of the previous meeting held on Tuesday 8 October 2024 as a correct record.

(Agenda republished to include the attached minutes on 18 February 2025)

RESOLVED that the minutes of the previous meeting held on Tuesday 8 October 2024 be approved as an accurate record of the meeting.

To consider any matters arising from the minutes of the previous meeting.

None.

Councillor Johnson (as Chair) advised that he had agreed to receive a deputation at the meeting from Sheila Guhadasan representing the Brent & Harrow Palestine Solidarity Campaign (PSC).  The Chair welcomed Sheila Guhadasan to the meeting along with the other representatives from the Brent & Harrow PSC attending in support, who advised that the deputation was seeking an update on progress with the Council’s review of investments under the UN’s Principles for Responsible Investment following the presentation of their petition divesting for Palestine at the Full Council meeting in September 2024.

In addressing the meeting, Sheila Guhadasan began by advising that the original petition had now attracted over 2000 signatures with the situation in Gaza and the West Bank remaining critical for Palestinians despite a fragile ceasefire and the deputation calling on the Sub Committee, as well as the Council, to recognise what were felt to be their legal and moral responsibilities and join the growing number of Councils, public bodies and institutions divesting for Palestine.

Referring to statements issued by the United Nations, Amnesty International and other reputable bodies regarding the impact of what those in support of the deputation and petition regarded as genocidal acts being committed by Israel in relation to their occupation of Gaza and the West Bank in violation of international law, it was pointed out these statements were also supported by rulings from the International Court of Justice and warrants of arrest being issued against Israel’s Prime Minister and former defence minister.

With UN experts having issued a statement demanding that states and companies stop arms transfers to Israel, and that financial institutions (including banks and pension funds) should cease investing in arms companies supplying Israel in order to avoid potential repercussions for complicity it was pointed out that, despite engagement with those institutions by human rights organisations over many years, it had not been possible to deliver any change in behaviour, supporting the need for more direct action.

Having previously called on the Council to consider divesting from companies complicit in Israel’s stance against the Palestinians, Sheila Guhadasan advised that the Local Government Association, had recently published an important new legal opinion (January 2025) on the ability of Pension Funds to take 'non-financial factors' into account when making investments decisions, which it was pointed out had included ethical considerations.

In terms of wider action, it was pointed out that the Brent and Harrow PSC had also been working with Trade Unions in support of their divestment campaign, including Brent National Education Union and UNISON as a recognised partner.  In addition, reference was made to actions being taken by other local authorities with the example of Tower Hamlets (following a UNISON led deputation) passing a motion declaring their intent to “divest all funds away from companies who deal in arms” alongside conducting a “complete audit of how all pension funds are used, and where any funds are invested” and other councils also making public commitments to divest including Bristol, Lewisham, Islington and Waltham Forest.

Highlighting that  ...  view the full minutes text for item 5.

To receive the Brent Pension Fund Q3 2024-25 Investment Monitoring Report.

The Chair then moved on the remaining items on the agenda and welcomed James Glasgow and Malcom Olsson (Hymans Robertson) who introduced a report, which outlined performance of the Brent Pension Fund over the third quarter of 2024-25. The Key points highlighted during the report are summarised below:

In introducing the report Malcolm Olsson began by providing a brief market overview and summary of the previous six months of the Fund’s investment performance, before detailing Brent Pension Fund's assets and liabilities.  The regional equity performance within the Fund was noted to have varied significantly, with North American equity leading while Europe (excluding UK) had performed more negatively at -3.8% and UK equities having shown a moderate performance of approximately 1.9%.  The rise in interest rates was also noted during Q4 which had directly impacted UK gilts with energy and basic materials having been the main detractors within global equity sectors. Factors affecting performance also included uncertainty from the recent North American election and decreasing oil prices which were adversely affecting energy industries. Consumer discretionary sectors had been observed to have performed well, which was noted as expected during a time of economic growth.

Moving on to consider Total Fund performance, the Sub Committee were advised of positive returns at 3.9% over the last six-month period. The Fund had posted a positive return for much of the quarter, ending with a valuation of £1,335.8m, up from £1,279.2m at the end of Q2, and £1,304.4m at the end of Q3 2024.  The Fund's passive global equity exposure had been the main driver for positive returns on an absolute basis, along with exposure to UK and emerging market equities. Within the income assets, the Fund's private debt and property exposure had contributed to performance on an absolute basis with the main detractor being the Fund’s government bond exposure, which had fallen in value as gilt yields had risen over the period.  On a relative basis, Members were advised that whilst assets had combined to return 3.9% over the second half of 2024, the Fund had underperformed its return benchmark by 0.2% and was also behind its composite benchmark over the past 12 month and 3 year period with members noting the current target and asset allocations exposure on an interim and long term basis across growth, income/diversification and protection plus cash and reflecting the Funds Investment and diversification Strategy. Cash held by the Fund had increased over the period to £65 million, with no major changes in asset allocation during this time and Funds identified as having performed in line with market trends.  This included not only a focus on Global Equity but also Multi Asset, Property and Infrastructure investment allocations which were aimed at reducing volatility.  It was noted that global equities had performed well, with a small increase in valuations across the board for total growth assets.  In terms of asset allocation, members were advised that the LCIV Infrastructure Fund had continued it distribution phase with cash proceeds of £6.7m also  ...  view the full minutes text for item 6.

This report provides an overview of considerations for moving towards the target infrastructure allocation of 15% of total Fund assets.

Sawan Shah (Head of Finance) introduced a report from the Corporate Director Finance & Resources which provided an initial overview of considerations for moving towards the target infrastructure allocation of 15% of total Fund assets.

Members were advised that the report had been presented to outline the available pathways which (due to their commercially sensitive nature) were due to be presented (as an exempt Appendix to the report) by Hymans Roberston in the closed private session of the meeting (Minute 16 below refers) prior to any final decision being sought by the Sub Committee on the way forward.

As initial context members were advised that the approach outlined had been designed to support the move towards the long-term strategic asset allocation of 15% to infrastructure assets as part of the most recent Investment Strategy review.

Having noted that the more detailed consideration of options would need to be undertaken in the closed part of the meeting the Sub Committee RESOLVED to note the initial context and background provided as a basis for further consideration of the option analysis due to be undertaken following the exclusion of the press and public during the closed session of the meeting.

To present members with an update on engagement activity undertaken by the Local Authority Pension Fund Forum (LAPFF) on behalf of the Fund.

George Patsalides (Finance Analyst, Brent Council) introduced a report from the Corporate Director Finance & Resources which detailed the Local Authority Pension Fund Forum (LAPFF) Engagement Update.

In presenting the update, members were advised that the LAPFF had been established to promote the highest standards of corporate governance in order to protect the long-term value of local authority pension funds and engage directly with companies in which investments were held in order to affect change, understand views on company behaviour and risks with engagement being member led and designed to advance corporate responsibility and responsible investment on the basis of collaboration strengthening the voice of Pension Funds.

In noting the summary of key engagement work undertaken by the LAPFF during Q3 2024 (as detailed in Appendix 1 of the report) the following key areas of activity were highlighted:

• Continued engagement with Shell and BP, to push oil and gas companies beyond their current decarbonisation efforts based on existing business models attempting to challenge the viability of current business practices. The expectation, based on LAPFF policy, was that the demand for hydrocarbons would reduce in aggregate terms and that demand would be met by lowest cost producers.  Whilst BP was regarded as being located at the better end of the sector in recognising climate change as an issue, it was also facing competitive and structural pressures from what was regarded as a disruptive transition due to alternative technologies with some push back on carbon reduction targets since 2023 and substantial threats identified to its business model regarding the scope of no-carbon products that would fully replace the scale of the fossil fuel business.  Members were advised that a meeting with the Chair of Shell was also pending confirmation, with LAPFF continuing to challenge whether Carbon Capture and Storage could be made to work as a line of business given the costs involved if no cheaper substitute energy sources were available.

• The engagement which had been focussed on the use and potential elimination of zero-hours contracts in the UK with companies using them as part of their core operation and LAPFF continuing to monitor developments relating to the Employment Rights Bill and engage with investee companies regarding their exposure to the practice.

• Ongoing engagement with water utility firms to address failures in supply infrastructure and concerns regarding pollution, with LAPFF working to ensure that water utilities companies were making progress in reducing overflow incidents while ensuring that upcoming business plans were cost efficient and included both environmental and social commitments aligned with any final determinations by the regulator.

• The efforts being made to ensure energy companies and airlines were making tangible efforts in seeking to decarbonise their industries in the transition to net zero including the use of fuel supplies and emissions.

Having noted the viability and advantages available through the sustained collective effort and pressure that could be applied through the LAPFF, rather than by single Pension Funds acting individually, the Chair thanked George Patsalides for presentation of the report, and then  ...  view the full minutes text for item 8.

This report provides an update on the provision of the LGPS online learning facility.

To note the draft minutes of the Pension Board meeting held on Thursday 7 November 2024.

(Agenda republished to include the attached minutes on 18 February 2025)

George Patsalides (Finance Analyst, Brent Council) introduced the report from the Corporate Director Finance & Resources, which provided an update on the provision of the LGPS online learning facility and informed committee members of recent training developments.

In introducing the update, it was noted that the Government in November 2024 had published their Fit for the Future consultation, which proposed a number of new measures to enhance governance, including a focus on the training of members involved in overall strategic direction of local authority pension funds.  This included the requirement for Pension Committee members to have the appropriate level of knowledge and understanding for their roles, with the requirements for Pension Committee and Local Pension Board members to be aligned in order to ensure they possessed the necessary knowledge and skills to effectively fulfil their roles.

In working towards this the Fund was already subscribed to the LGPS Online Learning Academy (LOLA) as an online platform designed to support the training needs of Pension Committee and Board members with a training plan (attached as Appendix 3 of the report) detailing progress in completion of the required training modules within the agreed timeframe.  Members noted the training plan had been adapted to accommodate new members to the Committee whilst also allowing existing members additional time to complete the required training programme, with the current focus on those needing to complete the required sections (up to Module 7) by February 2025. 

In noting the update provided on progress being made by members against the current training plan and in line with the Training Strategy, the Sub Committee was reminded of the importance in ensuring consistent engagement and progress in completion of the require modules (for which it was noted a majority of members remained on track) in order to ensure members possessed the necessary knowledge and skills in relation to their role on the Sub Committee and in overseeing the Pension Fund.

With no further questions or comments, the Chair thanked George Patsalides for his work in delivering the training plan and the Committee RESOLVED to note the plan.

Notice of items to be raised under this heading must be given in writing to the Deputy Director Democratic Services or their representative before the meeting in accordance with Standing Order 60.

No items of urgent business were raised for consideration at the meeting.

The following items are not for publication as they relate to the category of exempt information set out below, as specified under Part 1, Schedule 12A of the Local Government Act 1972:

Agenda Item 6:       Q3 2024-25 Investment Monitoring Report – Fund Manager performance ratings.

This appendix has been classified as exempt under Paragraph 3 of Part 1 Schedule 12A of the Local Government Act 1972, namely: “Information relating to the financial or business affairs of and particular person (including the authority holding that information).”

Agenda Item 7:       Implementation of Infrastructure allocation – Appendix 1: Investment Options and Analysis.

This appendix has been classified as exempt under Paragraph 3 of Part 1 Schedule 12A of the Local Government Act 1972, namely: “Information relating to the financial or business affairs of and particular person (including the authority holding that information).”

The press and public will be excluded from the remainder of the meeting as the report(s) to be considered contain the following category of exempt information as specified in Paragraph 3, Schedule 12A of the Local Government Act 1972, namely:

“Information relating to the financial or business affairs of any particular person (including the authority holding that information)"

At this stage in the meeting, the Chair advised that the Sub-Committee would need to move into closed session to consider the final items on the agenda.

It was therefore RESOLVED to exclude the press and public from the remainder of the meeting as the reports and appendices to be considered contained the following category of exempt information as specified in Paragraph 3, Schedule 12A of the Local Government Access to Information Act 1972, namely:

“Information relating to the financial or business affairs of any particular person (including the Authority holding that information)”.

As the Sub Committee moved into closed session the webcast was ended at this stage of the meeting

The Sub-committee to receive a presentation from London CIV regarding Private Debt.

The Chair welcomed Silvia Knott-Martin & Raymond Wright representing (London CIV), who he advised had been invited to attend the meeting in order to provide a presentation (in advance of consideration of the Private Debt Allocation item) on development of the LCIV Private Debt Fund II.

The presentation included details on development of the Fund along with its underlying strategies, key terms, Manager selection process, construction of the portfolio along with underlying investments, fund terms and fee negotiation.  Issues raised by members during the presentation included an assessment of the projected rate of return, flexibility of the Fund and options available in relation to the structure, diversification and construction of the investment portfolio with the Sub Committee, having noted the responses provided, thanking Silva Knott-Martin and Raymond Wright for the presentation.

This report provides and update on the Fund’s Private Debt Allocation in the short to medium term.

Following the presentation made on the LCIV Private Debt Fund II, Sawan Shah (Head of Finance, Pensions) then moved on to introduce a report from the Corporate Director of Finance & Resources providing an analysis and review of the Fund’s allocation to Private Debt along with proposals for a recommended investment in the LCIV Private Debt Fund II.

In considering the report, members noted the approach outlined towards maintaining a diversified range of investments across a range of asset classes, which following review of the Fund’s Investment Strategy had included a continued commitment to maintaining of a 5% strategic asset allocation to Private Debt.  In noting the current and long term target asset allocation and approach outlined within the report towards the ongoing strategic allocation in Private Debt, members welcomed the supporting analysis (as detailed in Appendices 1 & 2 of the report) provided by the Fund’s Investment Advisors (Hymans Robertson) on the LCIV Private Debt Fund II.

Having been provided with clarification around the overall investment approach and risk exposure the Sub Committee unanimously RESOLVED to:

(1)  Approve the investment commitment identified within the report to the LCIV Private Debt Fund II.

(2)  Note that following (1) above officers would rebalance the appropriate mandates to move towards the Fund’s strategic asset allocation to fund the investment as set out in section 3.2.17 of the report.

To update the committee on recent developments regarding Brent Pension Fund investments held within the London CIV (CIV).

The Board received and RESOLVED to note a report that provided an update on recent developments regarding Brent Pension Fund investments held within the London CIV (LCIV).

Issues highlighted arising from the update included:

• the value of assets invested directly through the LCIV.

• The change in senior management arrangements within LCIV.

As a final item the Chair reminded members of the initial consideration undertaken during the open session of the meeting in terms of options available for the Fund in seeking to move towards the target infrastructure allocation of 15% of total Fund assets.

Having noted the initial context and background provided, the Sub Committee received a more detailed analysis of options from James Glasgow (Hymans Roberston) relating to implementation of the Pension Funds infrastructure allocation and the potential pathways in seeking to develop investment options in order to meet the long-term target identified alongside the objectives and potential return and risk profiles identified based on current infrastructure assets and range of other Funds available for consideration.

Having considered the analysis by Hymans Robertson regarding the Fund’s infrastructure allocation the Sub Committee thanked James Glasgow for the strategic outline provided in relation to the different pathways for increasing the infrastructure allocation, including how ESG and local investment could be incorporated, timelines, and alternative Funds and RESOLVED that progress in developing the allocation continue to be kept under review.