Agenda item

This report updates the Committee on engagement activity undertaken by LAPFF (the Local Authority Pension Fund Forum) on behalf of the Fund.

George Patsalides (Finance Analyst, Brent Council) presented a report that updated the Committee on engagement activity undertaken by the Local Authority Pension Fund Forum (LAPFF) on behalf of the Fund during Quarter 3 (Q3) and Quarter 4 (Q4) 2023. It was explained that the partnership with LAPFF demonstrated the Fund’s commitment to Responsible Investment (RI) and utilising engagement as a way to achieve its objectives.

In summarising LAPFF’s engagement activity, the Committee noted the following:

•         In June 2023, the Department of Business and Trade had investigated a number of companies in breach of wage floor requirements, which included listed firms such as WH Smith, Marks & Spencer, Argos and Whitbread, impacting over 6000 employees. In a letter to these four companies, LAPFF had requested details outlining how such incidents occurred, the actions taken to address these breaches and how the breaches would be prevented in the future. All four firms submitted prompt responses to LAPFF, stating that the breach was due to a payroll error, with LAPFF continuing to monitor and approach companies found to be in transgression of labour laws.

•         Water companies were facing considerable reputational risks and regulatory scrutiny surrounding their environmental practices. Given that water companies were effectively regional monopoly suppliers subject to environmental and economic regulation, there were considerable regulatory and reputational risks as a result of malpractice. Thus, LAPFF Chair, Cllr Doug McMurdo, met with the Chair of Severn Trent to discuss the issues currently facing the industry, welcoming the news that the water supplier was ahead of its targets on reducing overflows, as well as refining its long-term plans to address climate change, such as capturing emissions from the sewage treatment process. Despite significant negative publicity surrounding sewage leaks, LAPFF continued to press water suppliers to advance their plans to address the environmental implications of their operations.

•         LAPFF executive Heather Johnson met with German technology firm SAP to discuss contingency planning for adverse impacts of AI, including the avoidance of discrimination of legally protected characteristics during hiring processes. LAPFF continued to hold technology firms accountable to ensure that appropriate frameworks and safeguards were in place to mitigate the risks posed by innovations.

After the conclusion of the update, the Chair opened the floor for questions and comments, with contributions summarised below:

•         In highlighting the large discrepancy between the number of companies contacted and the relatively small number of tangible improvements and action taken, members queried the reasoning behind the discrepancy between engagement activity undertaken by LAPFF and the outcomes achieved. In response, the Committee was advised that simply getting a response from companies, some being multi-national conglomerates, was an achievement in itself given the size of these organisations. Moreover, it was emphasised that change was often slow and piecemeal, with LAPFF ensuring that pension funds were represented and held a small degree of influence over the direction of change.

•         In discussing the collective lobbying power of pension funds and the collaborative opportunities available, it was explained that collective lobbying on behalf of pension funds was LAPFF’s main purpose. Additionally, the Committee noted that LAPFF held regular meetings throughout the year which provided further updates on their work, with members encouraged to contact officers if they were interested in attending these meetings.

•         Regarding Brent’s influence and role in LAPFF, the Committee was informed that LAPFF was councillor led, the Chair of LAPFF being Cllr McMurdo form the Bedfordshire Pension Fund, with the overall strategy set by members at the Annual Conference.

In commending the report and welcoming the update, the Committee RESOLVED to note the report.