Issue - meetings

James Glasgow (Hymans Robertson) introduced the report which provided details of the Fund’s exposure to Climate Risk. He highlighted that climate data was only available for 52% of the Fund’s assets. This was the proportion of listed or public assets. The report did not include data for private assets funds. However, it was expected that private asset funds’ reporting would improve over time. He stated that the report was based upon latest data from December 2022. However, for metrics that were only reported annually, it had been necessary to refer to data from March 2022. He advised that fund managers provided reporting data in different formats which made making a clear comparison between funds more difficult. It was expected that there would be improved consistency across managers’ reporting in future.

James Glasgow drew members’ attention to the chart on page 4 of the Hymans Robertson report which showed emissions intensity against Assets Under Management (AUM) for which reporting data was available. Emerging markets produced the highest levels of carbon emissions; however, they constituted a small proportion of the overall Fund. The largest contributor was the Legal and General Investment Management (LGIM) RAFI Fund. He suggested that decarbonisation of this fund be prioritised. The Border to Coast Pensions Partnership (BCPP) Global Equity Alpha Fund also showed high carbon emissions. However, it was noted that the manager had made good progress in reducing emissions intensity.

Referring to BCPP funds, James Glasgow highlighted the comparative data provided on page 5 of the report. It was promising that UK Listed Equity Alpha metrics showed a reduction in Weighted Average Carbon Intensity (WACI) from 81 in March 2021 to 61 in March 2022. However, there had been a 4% increase in portfolios with ties to fossil fuels. There was a need to focus on this area to achieve a reduction. For BCPP Global Equity Alpha metrics, there had been an uplift in the percentage of portfolios owning clean technology solutions, and a reduction in the percentage of portfolios with ties to fossil fuels.

James Glasgow advised that climate risk analysis for LGIM funds showed a mixed picture. Emerging Markets funds accounted for the highest WACI exposure. However, there was a need to view this proportionately across the entirety of the LGIM Fund. The LGIM UK Equity fund was found to have a higher carbon impact than its comparable benchmark. He emphasised that the benchmark data shown on page 10 of the report was for illustration only, some of the differences between the fund and the benchmark shown could be attributed to differences in underlying assets rather than a drift away from the benchmark. LGIM had been asked to provide clarification.

Councillor Millar praised the quality of the report and the work that had gone into preparing it. She emphasised that as the report covered only 52% of the Fund’s assets, there was a large proportion of the Fund for which climate data was not known. She suggested that efforts be made to apply pressure to  ...  view the full minutes text for item 6