Agenda item

This report presents an update on progress against the Fund’s net zero transition roadmap.

Sawan Shah (Senior Finance Analyst) introduced the report, which presented an update on progress against the Fund’s net zero transition roadmap. Members were updated that the Net Zero framework had been agreed by the previous Sub-Committee under the last Administration and subsequently the opportunity had been taken to present an update to the new Sub Committee membership.

Kenneth Taylor (Hymans Robertson LLP) then presented a more detailed overview, with Members noting the following key issues:

·                The outline of the practical roadmap towards net zero which had been agreed by the Sub Committee in October 2021 and progress achieved to date with regard to Responsible Investment (RI) training; introduction of RI focussed investment beliefs and investment in a new low carbon mandate and infrastructure fund with a significant allocation to renewables along with the selection of climate related metrics, which tracked the Fund’s progress against its reduction of emissions. This reporting was in line with London CIV metrics.

·                The key strategic challenges facing the Fund in terms of decarbonisation and context in relation to current carbon emissions and the levers available to the Fund in terms of capital allocation supported by ongoing engagement.

·                The Framework developed to support the Fund’s climate ambitions, which included the development of carbon metrics to support to drive towards net zero; reviewing the Funds existing mandates within the context of the net zero target that would need to be agreed upon by the Sub Committee and the process of engagement with the Fund managers in order to challenge and encourage best practice taking account of the Fund beliefs and climate ambitions;

·                As part of this process there would also be a need to review and update the Fund’s Responsible Investment (RI) beliefs and climate metrics.

The Chair thanked Kenneth Taylor (Hymans Robertson LLP) for the presentation and members were then invited to ask questions, with the responses summarised below:

·         It was asked what level of change the Fund would be able to affect in terms of engagement with LCIV and Fund Managers in relation to its climate ambitions.  In response members were advised of the opportunities available, with Fund Managers required to take account of the views of their investors which as part of the LGPS pool formed a strong opinion.  In addition the potential to engage with LCIV and managers on voting activity on climate related issues and to agree action on collaboration and public disclosure of activities top encourage change were also identified.

·         Regarding the setting of the Fund’s Net-Zero target date, members noted the options identified along with considerations to be taken into account and lobbying being undertaken with LCIV in terms of any further reduction in their current target of 2040.  Whilst recognising the challenges identified. Members remained keen to push for as early a target date as possible.

As no further issues were raised at this stage it was RESOLVED that the Pension Fund Sub-Committee note the update and ongoing work and progress being made on the Net Zero Transition Roadmap as detailed within Appendix 1 of the report.