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) introduced a report from the Corporate Director Finance & Resources which outlined the latest 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 July - September 2025 (as detailed in Appendix 1 of the report) key areas of activity were highlighted in relation to ongoing engagements relating to mining, water stewardship and the transition to net zero along with executive remuneration.  This had included a focus on concerns raised about the transparency and rationale of remuneration structures in some companies, particularly where performance-linked bonuses and long-term incentive arrangements were not felt to be clearly linked to the generation of shareholder value. LAPFF's role in challenging companies, on behalf of member funds, to ensure compensation structures were transparent and justified was therefore highlighted as an important function of the Forum.

Positive progress was also noted in relation to:

·            engagement with water utility companies. It was highlighted that Southwest Water had committed to a £3.2 billion investment in stormwater overflow and waste treatment infrastructure, targeting a 50% reduction in pollution. This was cited as a concrete example of LAPFF's engagement delivering meaningful environmental outcomes.

·            nature and biodiversity engagement, which members welcomed as evidence of longer-term divestment and stewardship themes gaining genuine traction.

Having noted the viability and advantages available through the sustained collective effort and pressure that could be applied through the LAPFF in seeking to promote corporate responsibility and responsible investment, rather than by single Pension Funds acting individually, the Chair thanked George Patsalides for presentation of the report, and then invited members to raise any questions or comments, with queries and responses summarised below:

·            A question was raised as to whether the role of the LAPFF would be diminished by the proposed transfer of investment implementation to London CIV under the Government's Fit for the Future reforms. George Patsalides and James Glasgow advised that LAPFF and London CIV served fundamentally different purposes and were not duplicative: London CIV was the Fund's investment pooling vehicle, whereas LAPFF was a network focused on targeted corporate governance engagement and stewardship. LAPFF engaged with a smaller number of companies in depth, whilst the large asset managers (including London CIV, Legal & General and BlackRock) undertook day-to-day voting and broader stewardship across hundreds of companies on the Fund's behalf. As a result it was not felt the role of LAPFF would be reduced as a result of the move to pooling arrangements under the Fit for the Future Reform.

·            Members were advised that George Patsalides had been in contact with the Fund's LAPFF liaison, who had offered to arrange a follow up for any members of the Sub-Committee or Pension Board wishing to raise questions directly with LAPFF. A communication would be circulated to members accordingly.

With no further questions or comments, the Sub Committee thanked officers for the update and RESOLVED to note the report.