The Director presented the Authority’s various responsible investment policies to secure approval following their annual review.

Members commented upon the importance of the Authority continuing to keep this high on the agenda to influence other funds to make similar changes.

Members probed around BP having no viable path to Net Zero by 2030 and how we would engage with this moving forwards.

The Director responded that through the Partnership he would like to see a clear understanding of where the threshold is for excluding individual companies however it is much easier to seek to do this in theory than in practice due to various constraints on portfolio managers. The structuring and parameters for the Equity Funds mean that there is exposure to every sector and there will always be some oil and gas companies within the portfolio, while they are present in the relevant index. The challenge is thinking about whether this is right for the partnership and being one of eleven funds, the Authority needs to continue to influence others on this journey with SYPA and seek to progress to this point.

Members expressed concerns over some of the language in the Climate Change Policy.

The Director responded that the Climate Change Policy is written in the context of the financial services industry and the fund’s assets and liabilities and how climate change affects the two. In terms of climate change analysis this is a very complex and evolving science, and the Authority is doing its best to make educated guesses using the information available. The key point to note is the Authority’s practical approach to addressing climate change which doesn’t come through in the dry policy documents, but this is a problem and an issue the Authority seeks to address in the way we invest and manage the funds and as much progress needs to be made as quickly as we can in a measured and considered way.

Members sought clarification around what the triggers would be for climate related engagement or whether this was on a case-by-case basis.

The Director responded that it was a mix between a case-by-case basis and a standard set figure so the collectively agreed voting guidelines by the eleven Border to Coast partner funds states that if a company doesn’t have a transition plan with science-based targets along other requirements then votes would be cast against the company. This would also depend on the nature of what you are engaging with them about as it may require setting more specific criteria.

RESOLVED: a) Members approved the following revised policy documents appended to the report:

i.                 The Responsible Investment Policy (Appendix A)

ii.               The Climate Change Policy (Appendix B)

iii.              The Net Zero Action Plan (Appendix C)

iv.              The Annual Statement of Commitment to the Impact Investing Principles for Pension Funds (Appendix D)

Cllr Dimond requested that his dissent be noted due to concerns over the language used in the Climate Change Policy.