Agenda item

The Committee considered a joint report and presentation of the Corporate Director of Neighbourhoods and Climate Change and the Corporate Director of Resources which provided information in relation to emissions resulting from activities and assets not owned or controlled by Durham County Council known as Scope 3 Emissions (for copy of report and presentation see file of minutes).

Introducing the presentation, Steven Saville, Strategic Category Manager, explained procurement activity aimed at encouraging suppliers and supply chains to measure their carbon footprint and to take steps to reduce CO? emissions.  The officer informed the Committee that, where appropriate, requirements for CO?reduction are built into contract specifications and Durham County Council had voluntarily adopted Procurement Policy Note 06/21, which takes account of carbon reduction plans as a mandatory requirement for contracts over £5 million per annum. The officer explained that the County Durham Pound ‘Durham TOMs 22’ assessment encourages decarbonisation by requesting information from contract bidders as to how this will be achieved, for example, by monitoring the number of car miles saved through the use of low emission vehicles. 

The Committee was provided with information on key categories identified, namely food, waste and construction and how the key categories are used to identify performance across supply chains in order to reduce energy and increase local opportunities. This enables the service to identify key contract partners with the capacity to develop innovative solutions to reduce emissions, for example a road surfacing procedure used by Rainton Construction which lowered the temperature of ground conditions resulting in decreased fuel usage and emissions. The service also strives to embed carbon reduction targets at the earliest stages of reprocurement and identify a baseline in key contracts to inform reduction targets.  The Committee noted the procurement of bespoke software to gather accurate data on carbon emissions was under consideration. 

The Strategic Category Manager concluded the presentation by describing activities to address Scope 3 Emissions in the future, including the progression of work with the Low Carbon Team on pipeline procurement processes, encouraging baseline mapping of key contracts and engagement with contract managers to share good practice and embed carbon management into procurement processes.

In response to a question from Councillor Kay as to whether the highways scheme which used recycled plastic as part of a road resurfacing procedure had continued, the Chair highlighted that further information on the matter would be available at the Joint Special Environment and Sustainable Communities and Economy and Enterprise Overview and Scrutiny Committee meeting to be held on Monday 16 May 2022. 

Councillor Adam referred to the carbon reduction plans for contracts over £5 million and asked whether there were similar measures in place for lower value contracts. The Strategic Category Manager clarified that the £5 million figure was based on central government guidelines, however, the threshold for services was lower, at under £180,000.  In response to a further question from Councillor Adam as to how contracts are assessed for social value, the Strategic Category Manager replied that a report detailing the social value impact was available and he added that he would be happy to supply Councillor Adam with a copy.

Councillor Elmer commented on how pleasing it was to see that Scope 3 Emissions were included in the carbon reduction work and he acknowledged the importance of gathering accurate measured data in relation to carbon reduction. The Strategic Contract Manager responded that he understood the software being considered for purchase by the Low Carbon Team will improve the accuracy of data.

Due to time constraints, Councillor Nicholls agreed to email his questions relating to localised delivery, to the Scrutiny officer, for a response to be provided by the service.

TheChair then introduced the Senior Carbon Management Officer, Stephen Beresford, who delivered a presentation outlining the actions contributing to Scope 1, 2 and 3 Emissions.  The Committee noted Scope 1 Emissions result directly from the burning of fuels such as oil, gas and petrol.  Scope 1 Emissions had reduced from the 2008/09 baseline levels as methodology had been refined and educational establishments had moved from scope 1 to scope 3, as a result of the increased academisation of schools.

Referring to Scope 2 Emissions, ie emissions from electricity purchased by the council and generated in a power station, these had also reduced since 2008/09, with the national grid becoming less carbon intensive.  Scope 3 Emissions, ie emissions resulting from activities from assets not owned or controlled by Durham County Council, had, in general, reduced since 2008/09, however, an increase was observed in emissions resulting from solid, liquid and gaseous fuels and purchased electricity.  It was considered that educational establishments moving from the scope 1 category to the scope 3 category had contributed to the increase.

The Senior Carbon Management Officer highlighted the importance of focusing on areas of third party emissions, which the council has the ability to influence. 

The Committee heard how the Low Carbon Team will be working with procurement colleagues to embed carbon and environmental aspects into processes through key contracts and identification of baselines, in order to reduce environmental impact, recognising that carbon management reporting should not place an undue burden on smaller-scale suppliers.  Concluding the presentation, the officer described actions for the future including awareness and engagement campaigns to encourage better recycling from council properties and the promotion of sustainable travel choices. 

The Committee then welcomed Paul Cooper, Head of Pensions, to deliver a presentation on climate risk and emissions relating to Durham County Council’s pension fund.  The Head of Pensions began by explaining how all local government pension funds in England and Wales are required to pool assets in order to improve investment opportunities and reduce costs.  It was noted that Durham County Council had joined 10 other equal shareholders to form Border to Coast Pensions Partnership (BCPP), who hold around £40 billion assets under management between them.  The Head of Pensions explained that the partnership provides the capacity to invest in a wider range of opportunities and increased the opportunities to address issues such as climate change.

The Committee noted that the pension fund has a fiduciary duty to act in the best interests of scheme members and employers and that it must not risk material financial detriment when considering environmental, social and governance issues.  The Head of Pensions outlined that Border to Coast Pension Partnership believes in an engagement approach as opposed to blanket divestment in respect of climate change and responsible investment more generally.  The Committee heard that in March, the Pension Fund Committee committed £70 million to support the launch of a Climate Opportunities Fund through Boarder to Coast, to invest in opportunities focused on reducing carbon emissions and supporting the low carbon economy.

Looking ahead, the Head of Pensions explained that at present there is inconsistency on the measures relating to Scope 1, 2 and 3 Emissions and work is ongoing to achieve consistent measures.  The Local Government Pension Scheme consultation on the Taskforce on Climate Related Financial Disclosures is expected in summer 2022 and it is anticipated this will require the adoption of universal metrics to be used when reporting emissions and related risks to portfolio investments. 

The Chair thanked the officers for their presentations and invited questions and comments from the Committee.

Councillor Stubbs referred to the graphs showing the reduction in emissions since 2008 and, acknowledging that data relating to 2021-2022 may show a slight increase, he asked if the broader trend continued to show a reduction. 

The Senior Carbon Management Officer responded that the reduction trend continued and he highlighted that up-to-date data was available on the council’s website. The officer added that it is expected that current data will show an increase in emissions as schools and buildings return to normal working arrangements following the pandemic.

In response to a question from Councillor Adam, the Head of Pensions clarified that the figure of £10 billion referred to in the presentation was the total private market commitments of the 11 shareholders to Border to Coast Pensions Partnership’s overall Private Markets programme.  In response to a further question from Councillor Adam as to the geography of Durham’s investment of £70 million in the Climate Opportunities Fund, the Head of Pensions explained that the fund, which had recently been launched, was likely to have exposure in countries with low governance risk and where there are emerging technologies.  

Councillor Elmer welcomed the work and referred to specific areas of emissions for which data was not available, such as the ‘grey fleet’, incineration and composting and investment in aviation. The Senior Carbon Management Officer responded that as staff return to workplaces, work continues to encourage staff to consider sustainable transport solutions and to increase the fleet of pool cars.  He acknowledged the limitations as to how influential this work will be, recognising that the primary concern for individuals was likely to be cost as opposed to carbon footprint.  With regard to waste, the officer informed the Committee that data was gathered at the first point of processing and included transport to the destination and emissions during processing.

Councillor Elmer then referred to investments in oil which he commented were likely to reduce in value with the move to more renewable sources of energy and he questioned whether consideration should be given to pension fund divestment in oil and gas.  The Head of Pensions referred to the Border to Coast Partnership’s responsible investment policy and commented that oil and gas companies may be among those who may provide future solutions to the energy transition.  He added that there was no government directive for a blanket divestment in oil and gas however it was expected that investment managers would influence the direction of travel by engaging with the more responsible companies within the sector. 

In response to a request for clarification from the Committee, the Senior Carbon Management Officer clarified the unit of measurement used in the tables within the presentation was tonnes of carbon dioxide equivalent.

Councillor Kay observed that whilst a high number of staff had been relocated from County Hall, the car park remained relatively busy and he asked if more could be done to incentivise staff to use alternative methods of travel.  The Senior Carbon Management Officer commented that the north car park seemed to be quieter than it had been prior to the pandemic and he spoke of the changes to behaviour since the return to work following the pandemic and the impact of new ways of working.  He referred to staff incentives to encourage greener travel, including salary sacrifice schemes for bicycles and public transport season tickets.

The Senior Carbon Management Officer explained that, in addition, safe cycle parks and shower facilities were being included in plans for new council buildings and the number of EV charging points was increasing.  The Chair commented that members would have an opportunity to explore this issue in more detail at the meeting on 16 May.

Councillor Potts referred to the approximate £40 billion of assets under the Border to Coast Pension Partnership and asked what proportion was likely to benefit County Durham. The Head of Pensions explained that the £40 billion was the total approximate value of assets held by the 11 partners and Durham’s share was approximately £3.5 billion. The pension fund is required to invest in assets and opportunities which will ensure a return and when considering local investment opportunities the risk and return must meet the fund’s requirements.  In December 2021, the Pension Fund Committee supported investment into a local investment fund to support small and medium enterprise within the north east. This will ensure local opportunities will be considered, if they meet the necessary requirements. The Chair commented that the Durham Pound is to be considered in more detail at a future meeting. 

Resolved:

That the report be noted.