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Agenda and minutes

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Items
No. Item

129.

Apologies for absence

Minutes:

None.

130.

Declaration of substitutes

Minutes:

None.

131.

Declaration of interests

If you have a Disclosable Pecuniary Interest* in an item of business:

·         if it is not yet on the council’s register, you must declare both the existence and details of it at the start of the meeting or when it becomes apparent;

·         you may choose to declare a Disclosable Pecuniary Interest that is already in the register in the interests of openness and transparency. 

In both the above cases, you must leave the room without participating in discussion of the item.

 

If you have a personal interest in an item of business and you intend to speak or vote on the item you must declare both the existence and details of it at the start of the meeting or when it becomes apparent but you may participate in the discussion and vote on the item.

 

*(a) Employment, etc - Any employment, office, trade, profession or vocation carried on for profit or gain.

(b)    Sponsorship - Any payment or other financial benefit in respect of your expenses in carrying out duties as a member, or of your election; including from a trade union.

(c)   Contracts - Any current contract for goods, services or works, between you or your partner (or a body in which one of you has a beneficial interest) and the council.

(d) Land - Any beneficial interest in land which is within the council’s area.

(e) Licences- Any licence to occupy land in the council’s area for a month or  longer.

(f)  Corporate tenancies - Any tenancy between the council and a body in which you or your partner have a beneficial interest.

(g) Securities - Any beneficial interest in securities of a body which has a place of business or land in the council’s area, if the total nominal value of the securities exceeds £25,000 or one hundredth of the total issued share capital of that body or of any one class of its issued share capital. 

 

This applies to all members present at the meeting.

  

Minutes:

Councillor Convery declared a personal interest in items on the agenda as a member of the Pension Fund.

132.

Minutes of the previous meeting pdf icon PDF 79 KB

Minutes:

 

RESOLVED:

That the minutes of the meeting held on 30 June 2020 be confirmed as an accurate record of proceedings and the Chair be authorised to sign them.

133.

Pension Fund performance from April to June 2020 pdf icon PDF 128 KB

Additional documents:

Minutes:

Members discussed the uncertainty of retail property markets going forward, given the insecurity of some rental income and pressure on town centre retail outlets.

 

Given the effects of Covid on frontier markets, particularly in India and Egypt, members of the Sub-Committee suggested that it would be helpful for discussions to be held with managers as to their holdings in order to ascertain any vulnerabilities.

 

The Head of the Pension Fund highlighted to the Sub-Committee that, as part of the  re-instatement of  currency hedge of global equities, it should be noted that because the assets being hedged were held by a third party, the Council would need to provide around 3% of the NAV assets as collateral.

 

 

RESOLVED:

(a) That the performance of the Fund from 1 April to 30 June 2020 as per BNY Mellon interactive performance report and detailed in the report of the Corporate Director of Resources, be noted.

(b)_That the presentation by MJ Hudsons Allenbridge, on fund managers’ quarterly performance, attached as Appendix 1 to the report, be noted.

(c) That the In-House Tracker Fund Manager be thanked for his many years of valuable service to the Council and his very successful management of the Fund over many years.

134.

Carbon monitoring and ESG rating pdf icon PDF 124 KB

Minutes:

 

 

 

 

Members noted the good progress made to date on achieving targets on the agreed monitoring plan on the decarbonisation policy and the ESG ratings of  portfolios and the carbon footprint of equity holdings.  They also noted the carbon intensive stocks in the LGIM emerging RAFI portfolio and agreed that it would be preferable to move away from this fund.  Recognising that it would be challenging, Members were nonetheless keen to see the Pension Fund aligning with the Council’s resolution to achieve net zero carbon by 2030.

 

It was noted that officers would continue to engage with managers on their ESG ratings, communicating Islington’s expectations on ESG and climate integration and a strategic approach to climate risk.

 

RESOLVED:

(a) That the ESG ratings of individual portfolios and average rating of 2.1 (previous rating 2.3) for the whole Fund, be noted.

(b) That the carbon footprint of the Fund’s public equities, as detailed in the report of the Corporate Director of Resources, be noted.

(c) That it be noted that the Fund had reduced exposure to carbon intensive companies by more than 25%  since 2016 and absolute emissions by more 34%.

(d) That engagement with portfolio managers continue in order to improve ESG ratings and achieve the targets set in 2022 for the whole Fund.

(e) That officers report to the next meeting on how the Fund might be reconfigured to achieve net zero carbon by 2030.

(f) That officers report to the next meeting on options for exiting the RAFI fund. whilst remaining in very low carbon investments in emerging markets.

(g) That officers report to the next meeting on options for alternative investments for the In-House Tracker.

135.

Forward Plan of business pdf icon PDF 92 KB

Minutes:

RESOLVED:

That the Appendix to the report of the Corporate Director of Resources, detailing agenda items for forthcoming meetings, together with the additional reports detailed below for the Sub-Committee scheduled for 8 December 2020 (see resolution 14 above), be approved:

 

(i) That officers report to the next meeting on how the Fund might be reconfigured to achieve net zero carbon by 2030.

(ii) That officers report to the next meeting on options for exiting the RAFI fund. whilst remaining in very low carbon investments in emerging markets.

(iii) That officers report to the next meeting on options for alternative investments for the In-House Tracker.

 

 

136.

Investment strategy update COVID stress testing pdf icon PDF 109 KB

Minutes:

The Head of the Pension Fund and Treasury Management noted that the shortlisting of managers for the multi-asset credit mandate would be taking place in the forthcoming week and invited attendance of members of the Sub-Committee.  It was anticipated that the appointment of the successful manager would take place in December 2020 and that an additional meeting of the Sub-Committee would be arranged for this purpose.

 

Having considered the options of portfolio 1 and portfolio 2 in the exempt appendix produced by Mercer, members decided to opt for portfolio 2 and that they would consider final options at the next meeting of the Sub-Committee.

 

RESOLVED:

(a) That the presentation from Mercer attached as Exempt Appendix 1 to the report of the Corporate Director of Resources be noted.

(b) That the COVID 19 recovery options over the period to early 2022 and its likely impact on proposed strategic asset allocation of options 1 and 2 in the exempt appendix be noted.

(c) That option 2 be adopted and the Investment Strategy Statement with the new investment benchmark be updated in due course.

(d) That the next steps to implement the agreed strategic asset allocation be considered by the Sub-Committee in December 2020.

 

 

137.

5 year Business Plan review pdf icon PDF 77 KB

Additional documents:

Minutes:

Having reviewed the key objectives of their five year plan, as detailed on page 56 of the agenda pack, members decided the following amendments to the objectives be made:

 

Addition to bullet point 1: “plus an expectation of strong business ethics from fund managers also”

 

Addition to bullet point 3: “ and a focus on strong business ethics and reputation to ensure the safeguarding of the Fund and its members”

 

 

RESOLVED:

(a) That progress made to date on some of the action plans in the agreed five year business plan, detailed in Appendix A of the report of the Corporate Director of Resources, be noted.

(b) That, subject to the following amendments to the objectives, the business plan be agreed for the next four years:

 

Addition to bullet point 1: “plus an expectation of strong business ethics from fund managers also”

 

Addition to bullet point 3: “ and a focus on strong business ethics and reputation to ensure the safeguarding of the Fund and its members”

 

 

 

138.

London CIV update pdf icon PDF 101 KB

Minutes:

 

 

 

RESOLVED:

(a) That the progress and activities in the news briefing Collective Voice-August attached as Appendix 1 (private and confidential) to the report of the Corporate Director of Resources, be noted.

(b) That the fee income funding model review and future consultations, detailed in the exempt appendix, be noted.

139.

COUNCILLOR SUE LUKES

Minutes:

Councillor Convery noted that Councillor Sue Lukes had been appointed as the Executive Member for Community Safety and would step down from the Pensions Sub-Committee. On behalf of the Sub-Committee, he thanked Councillor Lukes for her valuable contributions to the Sub-Committee’s debates and wished her success in her new role.  It was anticipated that Councillor Dave Poyser would be appointed as her successor at the forthcoming Audit Committee.

140.

EXCLUSION OF PRESS AND PUBLIC

Minutes:

RESOLVED:

That the press and public be excluded during consideration of the following items as the presence of members of the public and press would result in the disclosure of exempt information within the terms of Schedule 12A of the Local Government Act 1972, for the reasons indicated:

 

Agenda item E1       Title                                         Reasons for exemption

                             Carbon monitoring and ESG rating   Category 3 – Information

                                    - exempt appendices                    relating to the financial or   

          business affairs of any  

          particular person (including  

          the authority holding that

          information)    

 

Item E2 -           Investment strategy update COVID

                        stress testing - exempt appendix              - ditto -                                

   

                                

Item E3             London CIV update – exempt appendix     - ditto -                                 

 

 

141.

Carbon monitoring and ESG rating - exempt appendices

Minutes:

Noted.

142.

Investment strategy update COVID stress testing - exempt appendix

Minutes:

Noted.

143.

London CIV update - exempt appendix

Minutes:

Noted.