Agenda item
Carbon Foot Print Audit
- Meeting of Pensions Committee, Thursday, 19th November, 2020 6.00 p.m. (Item 6.2)
- View the background to item 6.2
Minutes:
Ms Miriam Adams, Interim Pensions and Investments Manager introduced the report and said it summarised the Fund’s carbon footprint analysis, quantification of the Fund’s decarbonisation progress of the listed equity portfolio of the Fund. She said the Fund had made strong decarbonisation progress since 2017 when it divested from GMO Global Equities and invested in LGIM Low Carbon Equities.
Ms Adams referred members to paragraph two of the report which detailed the reasons why investments needed to be climate friendly. In particular, she referred members to the diagram on page 35 of the agenda and said this illustrated the transition and pathways of the current policies and the direction of travel for climate change generally. Ms Adams highlighted the information at paragraph 2.2, which provided the Global and European Regulations and paragraph 2.3 which outlined the UK Government decision to declare a climate emergency and a commitment to become a carbon-neutral economy by 2050.
Reference was made to paragraph three and the next steps outlined. Ms Adams said the Committee needed to consider and agree a broad strategy in respect to a climate change strategy which was inclusive of the short-term decarbonisation targets to 2025 and 2030 and a commitment to net zero emissions by 2050.
The following comments were made by Members:
· Concern was expressed regarding the cost implication of commissioning such analysis and the impact on officer workload. Members stated this information was useful if it was to be used for decision making in the next twelve to eighteen months but feared the exercise would need to be repeated, if action was not taken in a timely way.
· The Vice-Chair, Councillor Blake said there were a few errors within the report which should be clarified for the record.
§ She referenced page 33 of the agenda (page 1 of the report) and the fourth paragraph of the summary. Councillor Blake said the sentence should read “Overall, carbon intensity (WACI) of the listed equity portfolio decreased by 29% …” and not “decreased is”
§ She also referenced page 34 of the agenda (page 2 of the report) and said under paragraph 1.1 the word should read “exception” and not “expectations”.
· Further to the corrections, Councillor Blake suggested the 3rd recommendation on page 34 of the agenda be amended to state the driver for the change was due to the Council’s fiduciary duty. She suggested the recommendation be re-worded and said the decarbonisation targets should be at least 2025 and 2030 and the commitment to zero emissions should be 2040.
The Pensions Committee RESOLVED to:
1. Note the contents of this report;
2. Note the reduction in carbon footprint from 2017 to 31 March 2020;
3. In order to meet the fiduciary duty of the Council, agreed to put in place a climate change strategy, inclusive of short-term decarbonisation targets to at least 2025 and 2030, and a commitment to net zero emissions by 2040 to align thinking with the Climate Emergency declared by the Council and the UK Climate Change Act 2008;
4. Agreed the adoption of the recommendations of the Task Force on Climate – Related Financial Disclosures (TCFD), to further embed climate led investment thinking. Analysis in will help the Fund to adopt and disclose according to TCFD recommendations (Metrics & Targets);
5. Agreed conducting climate change scenario analysis as per the TCFD recommendations to help the Fund to better understand climate change risks and opportunities that arise, both from the transition to a low carbon economy and physical damages; and
6. Agreed to expanding the scope in measuring climate change investment risk across the entire portfolio.
The Vice-Chair summarised the Committee would receive a further paper at the next meeting on what these changes would look like. She also questioned why the appendix was a restricted item and was informed that all Mercer papers come with a disclaimer and therefore it was restricted.
Supporting documents: