Agenda item

Cllr Steve Pearce, the Council’s representative on the Board of the Avon Pension Fund was invited to present the report to committee.

The following was highlighted:

a.       The Avon Pension Fund’s overriding investment objective is to meet future pension payments to members, in the context of affordability for employers and addressing climate change.

b.       The Fund continues its path to achieve responsible investment.  In 2022 the Fund achieved a 49% reduction in carbon intensity against the 2019 baseline.  The target is to become net zero by 2050.

c.        The Fund is administered by Bath & Northeast Somerset Council; the report includes a report on the ongoing challenges with staff recruitment and the strategy in place to manage administration of the Fund.  There are two broad management areas, the Pension Administration team, and the Finance & Investments team.

d.       The Fund is signed up to the Financial Reporting Council (FRC) UK Stewardship Code 2020 for the responsible allocation, management, and oversight of capital to create a long-term value for beneficiaries leading to sustainable benefits for the economy, the environment and society.

e.       The report provides details on the outcome of pooling of assets as directed by government; Brunel Pension Partnership manages 86% of the funds’ assets; the Fund in 2023 broke even with regards to net savings from operating in this manner.

The following was noted from the discussion that followed.

f.        De-investment, from companies that have to date failed to take responsibility on how they manage climate carbon emissions, is seen as the last resort.  The Fund will continue to engage with industry led initiatives to improve disclosure and build meaningful engagement with investee companies.

g.       The Investment remit covers a wide geographical area and is not limited to the West of England.  The future intention is to consider renewables and housing investment, but it must be the right investment with the right outturn.

h.       The achievements detailed in the section of the report headed Climate Change Metrics & Targets, were well received.  Transition continues and it is not deemed prudent to apply any adjustment to agreed targets.  Assurances were given that priority work would continue to retain advancement and gains already achieved. 

i.         The link with Stewardship UK enables collaborative discussions with investees on decarbonisation; it is understood and accepted that companies need time to adapt business models to manage climate risk and with ongoing engagement those companies failing to act responsible can be identified.     A report on the activities of the Local Government Pension Fund Forum , the collaborative body, is on line and a source of useful information.

j.         The challenges in recruiting appropriate specialists in pension administration was discussed when noting the information on backlogs.  The successful transition to a digital online platform to enable members a direct access to pension services had greatly assisted communication and member engagement.

k.       The pooling of assets had been a government directive and no further instruction had been issued.  Cllr  Pearce shared his view, that the funds were being well managed and there would be a level of resistance to further government direction.

l.         The governance document sets out how the oversight committee is formulated and currently there is only one representative from each of; Bristol City Council, North Somerset Council and South Gloucestershire Council.  BANES has 5 seats as the administrating authority.   This is something that can be discussed following the next round of local elections. 

The Chair thanked Cllr Pearce for attending and presenting the report to committee.

Resolved to note the report