Agenda and minutes

The Chair welcomed Mustak Hafiji, Barclay Lane, and Belinda Pyke of Justice for Palestinians (Leamington Spa) who were present to observe the meeting.

The Chair also welcomed Douglas Sharp, who had recently been appointed as an Independent Advisor to the Sub-Committee, as well as Sam Hampton who had recently taken on the role of advisor to the Sub-Committee on behalf of Hymans Robertson.

The Chair expressed his thanks to Philip Pearson, who had previously provided advice to the Sub-Committee on behalf of Hymans Robertson, emphasising that Philip’s contributions had been valued and highly respected.

Apologies for absence were received from Councillor Sarah Millar as well as Steve Robbins (Head of Finance Transformation and Transactions).

There was none.

To confirm the minutes of the meeting held on 9 September 2024.

Resolved:

That the minutes of the meeting held on 9 September 2024 be approved as an accurate record and signed by the Chair.

There were no matters arising.

Resolved:

That the Pension Fund Investment Sub-Committee notes the minutes of the Local Pension Board meeting of 9 July 2024.

Dapo Shonola (Pension and Investment Manager) introduced the report which provided details of the Fund’s Responsible Investment (RI) Policy for review and approval by the Sub-Committee. He reported that the Fund’s equity holdings were either pooled or under the supervision of Border to Coast Pensions Partnership (BCPP). The Fund’s RI Policy was aligned to the BCPP RI Policy. He advised that the latest review of BCPP’s RI Policy had not led to any material changes being made. The Fund’s RI Policy remained fit for purpose and therefore, no changes had been made to this iteration of the Fund’s RI Policy.

Dapo Shonola advised that the Sub-Committee had approved the latest iterations of the Fund’s Climate Risk Policy and Voting Guidelines at its meeting on 9 September 2024. Reviews since undertaken by BCPP had resulted in limited changes to their equivalent policies. He highlighted details outlined in the report relating to arrangements to mitigate deforestation risk, stating that the Fund’s equivalent policies sat above those of BCPP, and the changes made by BCPP were not in conflict with the Fund’s approved Climate Risk and Voting Guidelines policies.

Councillor Gifford commented that it was positive that BCPP’s Climate Risk Policy was regularly reviewed and that the effect of deforestation had been taken into consideration. He emphasised the importance of investment policies being regularly reviewed to ensure awareness of a broad range of environmental and geopolitical factors.

Councillor Hammersley highlighted the importance of ensuring that investment managers complied with RI policies set out by BCPP. He asked what measures were in place to ensure that organisations honoured their commitments.

Milo Kerr (Border to Coast Pensions Partnership) advised that BCPP worked closely with its external engagement service provider, Robeco, to ensure adherence to RI principles. Robeco held events throughout the year focusing on different engagement themes. An active approach was taken to managing holdings.

The Chair stated that the Sub-Committee was often contacted by residents and local organisations to highlight areas of potential concern around investments. He stated that policy changes to address deforestation showed that RI policies were frequently reviewed in response to issues and concerns as they arose.

In response to the Chair, the Sub-Committee agreed the recommendation of the report.

Resolved:

That the Pension Fund Investment Sub-Committee (PFISC) approves the Fund’s Responsible Investment Policy attached at Appendix 1 of the report.

The Chair stated that it had been proposed to withdraw this item from consideration. Councillor Hammersley moved that the report be withdrawn from the meeting and was seconded by Councillor Gifford. This was agreed by the Sub-Committee.

Chris Norton (Head of Investments, Treasury and Audit) introduced the report which provided details of the Government’s ‘LGPS Fit for the Future’ consultation. He advised that the Government had instigated a review of the Local Government Pension Scheme (LGPS) and the wider pensions industry. The Fund had recently responded to a ‘call for evidence’ relating to the review. Since then, the ‘LGPS Fit for the Future’ consultation had been launched with a deadline for responses of 16 January 2025.

Chris Norton advised that the consultation had three themes: reforming LGPS asset pooling; boosting investment in localities and regions in the UK; and strengthening the governance of LGPS funds and pools. The proposals around pooling suggested an approach to bring all areas of the LGPS to the same position and same minimum standard – likely with fewer, larger pools. He advised that Border to Coast Pensions Partnership (BCPP) was already well positioned against the minimum standards for pools. It was regulated by the Financial Conduct Authority (FCA), and its partner funds were well progressed on the road to being fully pooled. Additionally, BCPP had a long-term strategy which was aligned with the direction proposed by the consultation.

Chris Norton highlighted that the phrasing of the consultation questions gave a strong indication of expected outcomes. He highlighted key issues relevant to the formal response to the consultation. These encompassed an awareness of pension funds’ control over setting of the strategic asset allocation, arrangements for investment advice, and clarity around how local investing would operate in practice. It was considered that a broader definition of the word ‘local’ in this context was needed. It was not proposed at this stage to mandate any mergers of pools or funds. However, greater clarity of the Government’s expectations would be required so that funds and pools could better understand the likely circumstances under which mergers would be expected or potentially imposed. A special meeting of the Sub-Committee would be held in early January 2025 to consider the formal response to the consultation. The Chair of the Staff and Pensions Committee would also be invited to this meeting.

Councillor Gifford highlighted concerns about the assertion within the consultation that “it is in the interests of members that their investments support the prosperity of their local areas”. He commented that many Warwickshire Pension Fund members had moved elsewhere. It could not be assumed that they would necessarily be concerned about local prosperity. He queried the definition of ‘local’ in this context. For example, international companies were among some of the largest employers in Warwickshire, but it was unclear whether it was being suggested that investment in these companies would fulfil the desired objective.

Councillor Gifford highlighted commentary in the report relating to the implications of the Devolution White Paper and the potential interaction of devolution proposals with pensions reform. A broad definition of ‘local’ investment covering the whole of the UK would require careful management should mayors or combined authorities seek to influence investment decisions. He expressed concern  ...  view the full minutes text for item 5.

Alistair Wickens (Technical Specialist Pensions Fund Policy and Governance) introduced this report which provided updated governance information including details of the Pension Fund’s Forward Plan, risk monitoring, policies, and training. He highlighted the risk control actions which had been added to the Risk Register following its most recent review. These related to cyber security, the risk of governance failure, and data quality. Details were included within the report. He highlighted that the Training Policy had been updated following the recent Code of Practice Review by Aon. The revised Training Policy would be presented to the Sub-Committee at its meeting in March 2025.

Councillor Gifford stated that it was positive that the risk of climate change was acknowledged within the Risk Monitoring Chart. Cyber security was also a high priority area. He highlighted commentary in the report relating to staff training on phishing with additional cyber security training provided as required.

Alistair Wickens advised that the Cyber Security Policy had been reviewed in 2024. Data asset mapping work had been undertaken with all suppliers to ensure that each link in the chain was secure. Staff training had focused on phishing as part of wider cyber security training provided to staff.

In response to the Chair, Alistair Wickens advised that the Data Management Plan referred to within the report had not identified any essential data missing from the Fund’s pension records. The scores for the data management exercise had been good, and effective processes were in place to identify and put right any incorrect data.

Rob Powell (Executive Director for Resources) emphasised that the report outlined details of risk controls which supplemented existing cyber security arrangements. Risk monitoring work had not identified any concerns about the robustness of the cyber security systems in place.

Resolved:

That the Pension Fund Investment Sub-Committee notes the content of the report.

To consider passing the following resolution:

‘That members of the public be excluded from the meeting for the items mentioned below on the grounds that their presence would involve the disclosure of exempt information as defined in paragraph 3 of Schedule 12A of Part 1 of the Local Government Act 1972.’

Resolved:

That members of the public be excluded from the meeting for the items mentioned below on the grounds that their presence would involve the disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 12A of the Local Government Act 1972.

The Sub-Committee held a confidential discussion.

The Sub-Committee held a confidential discussion.

The Sub-Committee held a confidential discussion.

To confirm the exempt minutes of the meeting held on 9 September 2024.

Resolved:

That the exempt minutes of the meeting held on 9 September 2024 be approved as an accurate record and signed by the Chair.

There were no matters arising.