Come along and shake off the February Blues Thursday 23rd February 2023 We are meeting…
“Would the portfolio holder for finance please provide details of the nature of RCC’s investment holdings (both pension funds held through LCC, and other investments) and particularly whether these holdings are managed to emerging accepted standards of environmental and social governance. I.e. in light of the COP26 conference last week, are we investing in both an environmentally sustainable and ethical manner or are we investing in unsustainable and polluting funds or companies?”
In terms of the Council’s own investment activity, then we invest in line with our treasury management policy with approved institutions who meet certain credit rating standards. Our investments are placed with banks and building societies. We do not invest in property funds, shares or other investment vehicles.
CIPFA, who are our standard setting body, are currently consulting on the Treasury Management Code of Practice which we follow. One of the anticipated changes relates to a requirement for our policies to set out our approach to environmental, social and governance (ESG) investment considerations. We will be looking at how we meet this requirement when we update our Treasury Management Strategy for next year, following the CIPFA code of practice advice.
In terms of the Pension Fund, then we are Members of the Leicestershire Pension Fund. The Committee that runs the fund is required to have an Investment Strategy. That Strategy includes a section on Responsible Investment. Responsible Investment is an approach to investment that aims to incorporate environmental including climate risk, social and governance (ESG) factors into investment decisions, to better manage risk and generate sustainable investment returns. The Strategy includes guiding principles and explains how they are applied in practice. The full strategy can be found on the website and I will provide the link to members following this meeting
There has been widespread media coverage of Local Government Pension Funds following publication of a report from Platform and Friends of the Earth. The report highlighted the investment of local government pension funds in ‘fossil fuel’ companies and encourages divestment.
Leicestershire Pension Fund produced a response to the report. It estimated that only c1.8% of its total fund is invested in ‘fossil fuels’ and explained the steps it is taking to end fossil fuel investments and invest in a green and fair way. This year it has been transitioning its funds away from fossil fuel companies to renewable energy funds. One example given relates to a £750m investment into the LGPS Central Climate Balanced Fund which invest in companies in ‘green revenues’. Leicestershire Pensions Fund full report can be found on their website and I will be happy to supply the web address following the meeting.