Agenda and minutes

Apologies for absence were received from Councillors Sylvia McNamara and Jenny Muholland.

There were none.

Requests to speak at the Committee on a matter within its terms of reference must be made in writing to the clerk named on the front of this agenda by 5pm two working days before the meeting.

There were none.

Webcasting

The Chair announced that the meeting was being broadcast live to the internet and would be capable of repeated viewing and copies of the recording could be made available to those that requested them. Those seated in the Chamber were deemed to be consenting to being filmed. Anyone wishing to avoid appearing on the webcast should move to one of the galleries.

Welcome

Councillor Madlani welcomed to the meeting Nick Davidson (Independent Adviser) and colleague of Karen Shackleton. Also welcomed to the meeting was Councillor George Jabbour from North Yorkshire and Chair of the Joint Committee of Border to Coast Pensions Partnership who was attending the meeting as an observer.

Tabled Paper

The Committee was informed of the circulated Tabled Paper which corrected information in the main agenda relating to Table 1 in the Performance report on pages 20 and 21 and the Community Admission Bodies (Small Admitted Bodies) on page 63 of the Private Agenda.

There were none.

To approve as a correct record the Minutes of the meeting held on 19 September 2024.

The minutes of the meeting 9^th September 2024 were agreed subject to amendingthe highlighted word, from ‘Harris to Baillie Gifford’, the last bullet pointon page 12 of the agenda

“With regards to Fund Manager engagement, the next meeting was scheduled with Baillie Gifford and Aviva but this could be moved around to include Harris with Baillie Gifford as they were both active equity managers. The question around how Harris was performing in comparison to other growth managers could be raised at that meeting. A date for this meeting would be scheduled in members diaries.”

Report of the Executive Director Corporate Services.

This report presents the performance of the Pension Fund investment portfolio and that of the individual investment managers for the quarter ended 30 September 2024.

Consideration was given to the report of the Executive Director Corporate Services.

The Treasury and Pension Fund Manager introduced the report which outlined the performance of the Camden Pension Fund investment portfolio and the individual investment managers for the quarter ended 30 September 2024.

Karen Shackleton, Independent Advisor, introduced her colleague Nick Davidson who provided the Committee with a brief background of his career.

The Independent Advisor provided the committee with an overview of her comments on the financial markets and provided detail on the performance of the individual Investment Managers, as set out in Appendix A to the report.

Responding to Committee members questions, the Treasury and Pension Fund Manager, Independent Investment Adviser and Silvia Knott-Martin, London CIV Client Relations Manager provided the following information:

• In relation to whether the carbon intensity target for the Baillie Gifford Diversified Growth Fund was being diluted, the strategy was Paris aligned which was expected to align with the Pension Fund’s climate goals.
• Baillie Gifford was using its restricted carbon budget with competing stocks to contribute to the transition to a green economy in areas such as wind turbines as well as Ryanair’s appetite to invest in innovative new sustainable fuels. The stocks may come out of the portfolio over time if they were unable to keep pace with science-based government targets.
• It was about challenging the Fund Manager, making sure what they were saying was backed up by evidence and then monitoring them also expressing concerns about having such a holding in the portfolio.

Commenting further on the issue of Baillie Gifford meeting the Pension Fund’s carbon reduction targets, the Chair remarked that in the meetings he had with them, disappointment and concerns had been expressed about the declining commitment to achieving the Paris aligned targets. He had been partly reassured by the Head of the Environment Social and Governance (ESG) Team although the dialogue would need to be continued with them, including the requirement for them to keep the Committee informed of the public commitments they could keep.

In relation to a question about the assumption that had led to a 151% funding level, the Treasury and Pension Fund Manager advised that the main changes were the discount rate, noting that at the last triennial valuation the discount rate used was 4.4%, and as of September this had gone up to 6.3% which was a reason for the reduction in liabilities.

There had also been pension increases which in March 2022 was 2.7% and as of September 2024 was 2.3% which also contributed to a reduction in liabilities.

Commenting further on liabilities and the interest rate, the Independent Adviser informed the Committee that it would not be advisable to reduce contributions too quickly until it was clear where long term interest rates were going to settle.

Responding to a follow up question about how confident the Committee should be with figures quoted, the Treasury and Pension Fund Manager commented that Hyman Robert’s the Council’s Actuary had considered this in detail before  ...  view the full minutes text for item 7.

Report of the Executive Director Corporate Services.

This report updates the employers register for all the admitted bodies in the Pension Fund and relevant data for the Committee to review in light of their funding positions and scheme status.

This report has an appendix, which contains information exempt within the meaning of Schedule 12A to the Local Government Act 1972 and is not for publication. The appendix has, therefore, been circulated to Committee Members only.

If the Committee wishes to discuss the contents of a closed exempt appendix it may pass the proposed resolution identified at the end of the agenda to exclude members of the public and the press from the proceedings for that discussion.

Consideration was given to a report of the Executive Director Corporate Services.

The Treasury and Pension Fund Manager advised that the report was an annual report that provided an overview of the employer register for all the admitted bodies in the Pension Fund and relevant data for the Committee to review in light of their funding positions and scheme status.

She highlighted that the admitted bodies made up 3.78% of the fund and there had been no material changes since the report to Committee in December 2023.

The Chair drew Committee Members’ attention to the Part II Appendix of the report and advised that if the Committee wished to discuss the contents of the Part II appendix it must pass a resolution exclude members of the public and the press from the proceedings.

The Chair also provided some brief background to members on the reason the report was brought to Committee, informing members that due to one of the admitted bodies going bankrupt about 10 years ago and a further body having financial difficulties it was used to monitor admitted bodies. He explained that since IDEA had moved out of the Pension Fund, admitted bodies now made up a much smaller percentage and was a less material part of the overall fund.

However, as Charities and third sector organisations were in a precarious situation admitted bodies would continue to be monitored and reported on regularly.

RESOLVED –

THAT the contents of the report were noted.

Report of the Executive Director Corporate Services.

This report brings Members up to date with engagement activity undertaken by the Fund and on its behalf by LAPFF (the Local Authority Pension Fund Forum) since the last Committee meeting.

This work is important to the Fund’s ambition to be a fully engaged investor and demonstrates its commitment to Responsible Investment and engagement in Environmental, Social and Governance (ESG) issues as the Fund works to maximise returns on investment.

Consideration was given to a report of the Executive Director Corporate Services.

The Treasury and Pension Fund Manager informed the Committee that this was a regular report presented to Committee Members updating them with engagement activity undertaken by the Fund and on its behalf by the Local Authority Pension Fund Forum (LAPFF) to promote good governance and behaviour in environmental and social issues.

She highlighted that:

• Table 1 listed the top areas of focus for this quarter with climate change taking top priority with over 100 engagements and LAPFF sending close to 100 correspondences and holding close to 20 meetings.
• They were mostly in the dialogue phase with 9% activity approximately ranging from small improvements to satisfactory response.
• With regards to response to correspondence which members queried at the last Committee meeting in September, LAPFF representatives had confirmed that there was a lag between when the engagement took place and the outcomes were seen.
• For every outcome of positive change that did take place it was not uncommon to see a lot of correspondence being sent out and meetings taking place.
• However, the number of engagements and correspondence highlighted the level of activity and push from LAPFF on behalf of the Pension Funds.
• A notable successful outcome of LAPFF’s engagement with companies included engagement with Volkswagen resulting in it deciding to exit its Xinjiang operations due to allegations of the use of forced labour.
• In recent meetings key areas of engagement had been around pushing companies to adopt more strict human rights and environmental protocols and improving risk management strategies. Decarbonisation, aviation and the cement industry were other areas.
• Corporate Governance issues relating to facilitating shareholder resolutions in UK firms and recent Financial Conduct Authority (FCA) changes were discussed,
• Table 3.1 provided details of future meeting dates with the LAPFF Annual Conference occurring later this week and the business meeting on 29^th January 2025.
• Table 3 showed the companies the Pension Fund had invested in and that LAPPF had been engaging with including the topic of and current state of engagement.
• There were discussions going on with LAPFF to provide a bit more detail around these engagements including the evolution of engagements with these companies so the effectiveness could be seen.

The Vice Chair of the Committee as a member of the LAPFF Executive was invited to update the Committee on LAPFF engagement, she commented that discussion around conflict affected and high-risk areas (CAHRA’s) was interesting with people keen to do this, with the need for work along these lines to continue. The details in the letters the LAPFF sent to companies was not published, so if there was an interest in the dialogue it was this information that needed to be seen.

The Chair reminded members that anyone could attend the business meetings which were all public and if they were interested in getting involved in any particular engagements they had the opportunity to do this.

A Committee member noted that it would be interesting to receive an  ...  view the full minutes text for item 9.

Report of the Executive Director Corporate Services.

This report provides a quarterly update on developments at the London Collective Investment Vehicle (CIV) in creating sub-funds for the spectrum of asset classes, on-boarding of assets and development of the CIV’s staff resource. Progress with the London CIV contributes to the Government’s pooling agenda and drive to reduce costs in the Local Government Pension Scheme (LGPS).

Consideration was given to a report of the Executive Director Corporate Services.

The Treasury and Pension Fund Manager introduced the report outlining the developments and progress of the LCIV as at 30^th September in creating sub funds for the spectrum of asset classes, on-boarding of assets and development of the CIV staff resource.

Client Relations Manager (LCIV) Silvia Knot-Martin and Head of Real Estate (LCIV) Christopher Osbourne were in attendance and provided the following information to the Committee.

·       LCIV during 2024 launched 6 funds and 1 service.

·       There were 4 public market funds, 3 funds were bought and maintained credit funds which were a full suite which offered short duration, long duration and all maturities funds.

·       £1.4 billion was raised from 9 investors

·       Inside Investment Management was selected to manage these funds.

·       At the end of October, the Global Active Value Funds had £195 million from 2 investors with a third investor adding £150 million in January.

·       Wellington Investment Management were selected to manage this fund.

·       The four funds’ strategies were committed to a decarbonisation pathway to achieve net zero by 2040.

·       Accountability and transparency were embedded in the design of the Global Equity Value Fund to ensure that 60% of the current weighted average carbon intensity was reduced by 20-30% and achieved net zero by 2050.

·       To achieve these targets would involve monitoring the achievements of the existing targets to ensure that ambition translated into action.

·       There would be continued engagement to encourage additional investing companies to develop a transition plan, stewardship escalation options with voting and writing letters and portfolio construction considerations, if investing companies did not progress as envisaged.

·       The Global Activity Fund would have certain exclusions to thermal coal mining, some coal power generation and controversial weapons.

·       With the 2 launched private market funds, the Nature Based Solutions Fund would primarily invest in sustainable forestry and agriculture and exposed to Australia, New Zealand and the USA. 20% in the UK and Europe and up to 30% in emerging markets in Chile and Brazil.

·       The Private Debt Fund would invest primarily in mid-market direct lending in Europe and North America. 

·       The service launched was focused on LCIV’s partner funds which had separate managed accounts such as Camden with CBRE Investment Management.

·       The pooling solution involved transferring the investment management of real estate separate managed accounts across to LCIV.

·       It still qualified as under pooled management so it still offered partner funds the opportunity to advance their pooling agenda.

·       This represented a governance change for Camden rather than an investment change.

·       The UK separate managed account would continue to be actively managed by CBRE IM.

·       Through on boarding partner funds on to this real estate pooling service opportunities had been identified to deliver cost saving particularly at the underlying manager level.

·       The transition to the service was intended to cause minimum disruption to partner funds.

Responding to Committee members questions, the LCIV Client Relations Manager and Head of Real Estate provided the following information:

·       In relation to  ...  view the full minutes text for item 10.

Report of the Executive Director Corporate Services.

This report sets out items scheduled for future agendas of this Committee together with a record of training/ meetings attended and a list of future training opportunities.

Consideration was given to a report of the Executive Director Corporate Services.

The Interim Head of Treasury and Financial Services informed the Committee that:

·       The Carbon Footprint report was scheduled to be considered at the March meeting, in advance of that meeting a training session would be scheduled to discuss and explain the metrics in detail.

·       Further to the conversation about the new Service launched by LCIV partners. This could be considered at the March 10^th Committee meeting.

·       The government had recently launched a consultation the closing date of which was 16^th January. Officers were working on responses to the consultation and were looking to circulate information and material to members from briefings officers had attended. As the next meeting of the Committee was not until March information and the dialogue would be circulated to members via email.

·       The areas to be discussed and consulted on were making LGPS fit for the future, transparency of local investments and governance. The Chair informed the Committee that he would request officers to circulate the information to members, however as the consultation closing date was 16^th January before the next Committee meeting in March, he would request that the Committee delegate signing off the Camden response to officers (Executive Director of Corporate Services) in consultation with the chair of the Pension Committee.

In response to a Committee member’s query about when a draft response to the consultation would be available the chair advised that it would be by 9th January 2025.

Officers agreed to circulate the draft consultation response to Committee members by 9^th January 2025.

Action By: Interim Head of Treasury and Financial Services / Treasury and Pension Fund Manager

A member discussed the possibility of having a briefing session to discuss some of the points and issues raised in the consultation document, officers advised that there were some slides put together for officers briefing which explained the issues clearly and could be circulated to Committee members. Officers agreed to circulate these slides to members.

Action By: Interim Head of Treasury and Financial Services / Treasury and Pension Fund Manager

The Committee noted the items scheduled for future agendas of this Committee together with a record of training sessions and meetings attended and a list of future training opportunities.

RESOLVED –

THAT the contents of the report be noted.

The next meeting of the Pension Committee will be held on 10 March 2025.

Noted as 10^th March 2025.

There was none.