Agenda item

The Committee considered a report of the Corporate Director of Resources and presentation by Milo Kerr, Head of Customer Relationship Management, BCPP on the BCPP Responsible Investment Policy (for copy see file of Minutes).

M Kerr explained as regards the background to the development of the Responsible Investment (RI) Policy and noted that RI was central to the BCPP approach to investment.  Members were informed as regards the RI Team members at BCPP.  M Kerr noted the RI Policy, Corporate Governance and Voting Guidelines and Climate Change Policy and gave examples of how the RI Policy was used in action, in terms of voting at company AGMs.  The Committee noted updates to the exclusions in respect of investments in thermal coal and oil sands, thermal coal generation and controversial weapons.

Councillor J Atkinson noted 23 votes against management at company AGMs and asked how those votes were decided upon.  M Kerr noted that there were around 1,000 votes annually and therefore work was carried out with BCPP’s Voting Partner, Robeco, to interpret the voting guidance against motions being tabled at AGMs.  He added that there would be internal debate at BCPP in addition on high profile issues prior to a vote being submitted. 

Councillor C Varty commended M Kerr and BCPP on their work, the 23 votes and work on exclusions, especially on controversial weapons.

Councillor D Freeman noted the vote against Glencore at their AGM and asked would there be a point where we would look to divest.  M Kerr noted the vote was against their 2022 Climate Report, explaining it was felt their strategy and progress did not align with the Paris Climate Agreement. 

He added that BCPP supported a shareholder resolution as regards disclosure of use of thermal coal.  He added that divesting was always a last option, once other options had been exhausted.

Councillor K Earley asked if it would be more impactful if whole LGPS took more action in terms of investment, with this perhaps being more impactful in terms of making companies make positive changes.  M Kerr noted there would be the opportunity to again invest in Climate Opportunities from April 2024, noting it was felt there would be great opportunities in the near future in terms of low carbon.  The Chair noted that this was an issue that remains high on the agenda at the BCPP Joint Committee.

Councillor J Shuttleworth left the meeting at 11.05am

The Head of Pensions (LGPS) reminded Members of the fiduciary duty, with a primary responsibility of ensuring returns on investment in order to pay pensions and to keep employer contributions as stable as possible.  He noted that issues such as climate change were considered primarily through the lens of investment risk and opportunity.  He noted the good work of BCPP in managing the Pension Fund Committee’s position and highlighted that simply divesting from companies could negatively impact the fund and that with BCPP ramping up their engagement in terms of issues such as Climate Change, this provided an opportunity for positive real world change. M Kerr noted that BCPP was recognised as an industry leader with a recent 2023 Pensions for Purpose Paris Alignment Award - Best Climate Change Policy Statement.

Resolved:

(a)     That the Policies and the key changes highlighted in Appendix 1 be noted;

(b)     That the: (i) the Responsible Investment Policy, (ii) the Corporate      Governance and Voting Guidelines Policy, and (iii) the Climate Change    Policy included in Appendices 2, 3 and 4 which BCPP will operate on     behalf of the Pension Fund for assets transferred into the pool be noted and approved:

(c)      That the adoption of the BCPP Voting Guidelines for any asset held outside of the pool be approved, and;

(d)     That the Corporate Director of Resources be authorised to amend the

          Fund’s Investment Strategy Statement (ISS) in line with the principles         of BCPP’s Responsible Investment Policy.