Members considered the Responsible Investment Update for Quarter 4 2020/21 which was in a new format intended to make it more accessible for stakeholders.

It was noted that highlights included:

·         The casting of over 1,000 votes at over 100 different company meetings.

·         A continued voting focus on Board independence and diversity and the need for companies to effectively adapt to climate change.

·         A more balanced focus to engagement in the quarter between social and environmental issues, with social issues retaining greater prominence than previously.

·         The recovery of a net £373k through shareholder litigation.

·         Continuing progress on the development of SYPA’s first impact report and a contribution to work on lace Based Impact Investing being recognised in a case study.

·         Agreement to work to progress improvements in ESG reporting for the commercial property portfolio.

Members noted that activity during the quarter had become more balanced between the various issues being engaged on.  In part this reflected the AGM season which brought broader governance and remuneration to the fore, it also reflected the fact that LAPFF had undertaken a significant amount of work around social issues associated with the pandemic.

Robeco had launched a new engagement theme on the climate transition of financial companies.  It was noted that this was significant because banks provided much of the capital that could be used to either maintain investment in climate negative industries or support investment in the opportunities presented by the transition to a low carbon economy.

G Graham informed members that HSBC’s Board had put forward a proposal to phase out the financing of coal and other fossil fuels to their AGM which had met with almost universal shareholder support. This seemed to add weight to the sense that companies were changing quite rapidly.

Cllr Stowe commented that as responsible investment was the biggest topic members were lobbied about it was important that members understood responsible investment matters and all the elements within it.

The engagement debate was also important as there was a lot of lobbying around divestment.  He pointed out the Exxon, who had been held up as one of the worst examples on not adapting their business to address to climate change concerns, were now starting to improve due to engagement.

G Graham informed members that a further Responsible Investment Seminar would take place in the autumn.  Border to Coast was also producing video material on an introduction to responsible investment which would be available in the near future.

It was noted that there had been a considerable reduction in carbon emissions from SYPA’s equity portfolios in the last 12 months which was significant travel in the right direction.

A Devitt commented that it was important to keep an eye on the emerging market portfolio especially in terms of Chinese allocations.

Members felt that it would be useful to get further information on this from Border to Coast’s China managers.

L Robb commented that there were two key points for next year’s strategy review.  One was how to build ESG factors into the strategy and the impacts of this on asset allocation and also how Border to Coast could manage asset classes to take account of SYPA’s objectives.

RESOLVED – That the report be noted.