Decision Maker: Pensions Committee
Decision status: Recommendations Approved
Is Key decision?: No
Is subject to call in?: No
The Chair welcomed those Members of the public who were present and invited those who had registered to speak to address the Committee.
Mr Reimers said thank you for sight of the draft response to my question for the meeting of the Pensions Committee on 8 March 2019 which was cancelled. I note the reference in the draft response stating that the Pensions Committee is not tied in its investment decisions to the policies of Somerset County Council.
I wonder whether, three months on, there is now greater clarity about how Somerset County Council Pensions Committee, with due regard to its fiduciary duties, is taking the declaration by the County Council of a climate emergency on 20th February this year into account when deciding on its investments, despite its independence from the County Council itself
Most, if not all, of the other West Country Councils (as well as the Environment Agency), whose Pensions Committees are members of Brunel Pension Partnership have also declared a climate emergency. To date have any such declarations played a part in the investment decisions being made by Brunel Pension Partnership?
The Funds and Investment Manager thanked Mr Reimers for his statement and on-going interest in the work of the Pensions Committee and responded to the main points raised as follows:
It is not possible for the Committee to change its approach to any matter of policy outside of the formal decision making of Committee meetings, as the Committee has not met the position has not changed. You will note that the matter is not on the Agenda for today’s meeting but there will be a discussion regarding the future meeting workplan.
The Brunel Pension Partnership has been tasked by the founding Funds with delivering a range of investment portfolios which individual funds then get to choose from. No fund has made a formal request for a change in the portfolios offered by Brunel to meet climate considerations. Officers of Somerset CC are not aware of any informal discussions but it is possible these have taken place.
Mr Dunk made a statement about the potential future dangers of investing in fossil fuels in light of the current climate emergency and in summary he asked 3 questions of the Committee:
1. Would the Committee immediately resolve to transfer some investments to the Brunel Pension Partnership’s Passive Low Carbon Equities Portfolio and look into the possibility of also investing in the Active Sustainable Equity Portfolio?
2. Would the Committee commit to phasing out pension fund investments in fossil fuels (including companies that provide services for fossil fuel extraction and delivery systems) over the next 5 years?
3. Would the Committee work with the Brunel Pension Partnership to ensure that the above target was met and work with the other Pension Fund holders in the Brunel Pension Partnership to reach a common approach to fossil fuel divestment as it would manifestly speed up the process and give Brunel the information it needed to tailor its portfolios accordingly?
The Funds and Investment Manager thanked Mr Dunk for his statement and responded to the main points raised as follows:
Q1. The Committee chose not to revisit this decision at this time. The process of moving assets to Brunel over a 2 to 3 year period is a very complex and potentially expensive undertaking. When the Committee chose the investments, it wishes to make with Brunel it also noted the complexity and potential costs and recognised that changing the investment strategy within the transition window would bring significant additional risks. The investment strategy is a key piece of committee work and will be reconsidered regularly in the future.
Q2. The Committee has not committed to the phasing out of investments in fossil fuels. ESG considerations are an important consideration within the investment strategy and the Committee will review this after the Brunel transition window and regularly thereafter.
Q3. The Committee will only seek to change Brunel activity when it does not meet the Funds agreed policies and needs, this is currently not the case. No other fund has formally asked Brunel to revisit the agreed policy of not divesting.
The Chair of the Committee thanked both members of the public for attending the meeting and asking questions. He noted that the Committee regularly considered its investment strategy and explained that taking a decision to disinvest in fossil fuels investments or with companies that were ‘ecologically sound’ was not as straight forward as it seemed, as it required a judgement that would be finely balanced and quite subjective.
He reiterated that the Committee regularly reviewed its investments and was mindful of its fiduciary duties and minimising potential future risks associated with some investments. He also confirmed that the Committee as it was currently transferring its to the Brunel Partnership would not discuss the issue of fossil fuels investments further at the meeting.
Publication date: 24/06/2019
Date of decision: 07/06/2019
Decided at meeting: 07/06/2019 - Pensions Committee