Agenda item

To answer any written questions about matters that are within the powers and duties of the Committee. The closing date/time for the receipt of questions is 10.00am on 15th September 2023..

The following supplementary questions were asked:

Question 1 - Penny Kent asked why is Gloucestershire Pension Committee in a Council which declared a climate emergency years ago, so lacking in initiative on climate action compared to other counties around the south west?

The Chair referred to the published response already provided for question 4.  He explained that many of the funds within Brunel travelled at a different pace but overall he thought GCC was in a good place.    As Brunel was a leader regarding responsible investment and that Gloucestershire was part of that pack the Chair disagreed with the claim that the fund was lagging at the extent suggested.

Question 2 - Penny Kent asked would Gloucestershire Pension Committee now also take its ethical and moral responsibility seriously?

The Chair replied the Committee did take it's ethical and moral responsibility seriously but it also had to balance that with its fiduciary responsibilities.  He explained it was necessary to recognise the pension fund was funded by employer contributors, members of the scheme but also as a backstop by the taxpayer. Those parties involved all had input into this, but part of that process was very much striking that balance between what would be referred to as responsible investment, while ensuring that the fund delivered the correct returns needed, in order to pay scheme members their pensions when they become due, or continue to be paid.

The Chair recognised that in any range of investment, people will hold different views but he was content that the fund was on the right trajectory for investments in relation to fossil fuels. It was explained that some of those fossil fuel companies were leading in Renewable Energy and it was essential to be engaged with those companies in order to influence those decisions, with our partners in Brunel.  It was explained that other countries, who wouldn't be such a positive influence would be keen to take up those investments if the fund withdrew from its investment.  The Chairman felt it was a question of being better off being at the table, being invested and having influence to drive their policies going forward, as the Pension Committee policies were very much aligned to those of responsible investment.

Questions 3 - Penny Kent asked you say you acknowledge that you may need to take an action and have reserved the right to influence specific exclusions if appropriate, the planet is burning and were heading for a climate cliff edge, if not now, when?

The Chairman felt this was a very similar question to the previous question.  He reflected the fact that Brunel throughout it's the various meetings had shown commitment to responsible investment.  The Chair believed Brunel were one of the leading managers in this country with regards to looking at investments, as they dug very deep, talked and engaged with those companies.  It was explained that profits ended up as reinvestments or as dividends which funded the pension fund.  The Chair recognised there was a circle of investment and investments in companies like Shell formed part of the fund and the they very much were part of what pays our current pensioners pension. The Chairman felt that the fund was better off at the table, being able to influence and better off with companies who were investing in renewables into the future.

Question 4 - Alan Mossman wondered what stopped the Committee going out and gathering information from the contributors to the county pension fund?

The Chair responded that the fund held engagement sessions with all of the employers, and employer/employee representatives were also members of the committee and the pension board.  It was noted that all members (60,000+ members) of the scheme were entitled to attend the annual meeting each year.  The County Council was a transparent body and would always engage with anybody who wished to engage.  In addition, there was an engagement strategy, a communication strategy, and a huge amount of information with regards to the Pension Committee activities and the activities of Brunel available on the internet.

Question 5 - Alan Mossman advised the committee there was research available and he was happy to share it with the Chair, that suggested that divesting first and then engaging is much more effective than engaging while investing. Mr Mossman asked why was the committee reluctant to do pursue this method?

The Chair accepted Mr Mossman's offer of the research and asked him to send it directly via email and he would ask Brunel for their interpretation of the research and provide a response in due course.  He felt this wasn't a fair comment and referred to the direction of investments and the allocation of our assets over the last 18 months, which clearly indicated a direction of travel into responsible investments.

Question 6 - Alan Mossman remarked that it was great that the fund had some investments in affordable housing, but why only 50% in the county?

The Chair explained there were several reasons and they were well documented in previous reports that were available online.  He added that fundamentally one needed to recognise that part of our fiduciary duty was having a balanced portfolio.  The Chair appreciated that most members would like to see that figure at 100%, as opposed to the independent adviser who would prefer it much lower, therefore it was necessary to strike a balance, hence the 50%.  It was also recognised that there weren't many opportunities that come forward that represent an acceptable investment package where affordable housing in Gloucestershire would be offered and such an investment opportunity needed to be explored. 

Question 5,6 & 7 - Alan Mossman referred to the letter that Councillor Turner submitted in March 2023, and he asked when would the Chairman respond to all the points in raised in that letter?

The Chair explained that Councillor Turner had joined this Committee in May 2023 and he was sure she would play a very active role in the committee and would be more influential as a member of the committee.   It was noted that all of the policies were readily available in the public domain, in addition Brunel also produced large volumes of reports that could be viewed online. 

Question 9a - Alan Mossman asked what were the advantages of retaining investments in fossil fuels?

The Chair replied investment in any funds involved a degree of subjectivity.  He didn't think it was possible to say with any certainty where the investments would be in so many years, with or without fossil fuels investment.  He reiterated the committee's main fiduciary duty was to have a balanced portfolio and fossil fuel investments only equated to 1.3% of the total fund.   He understood the concept that it was better to be at the table and have the ability to influence, or walk away from that ability.  The Chair believed it was important to be at the table, and have the ability to influence as it also aligned with fiduciary duty, and that was also the advice of our independent investment adviser, therefore it remained the policy of this pensions committee.  

 Alan Mossman sought clarification as to what was the advantage of being at the table?

The Chair explained that together with the response to question 9a, it was still important to retain that balanced portfolio, through the fiduciary duty and the ability to influence.  

Question 9b - Alan Mossman asked what were the advantages of switching from fossil fuels to green and ethical investments?

The Chair explained that the fund had already switched from some fossil fuels to other investments with the support of Brunel, as the fund was now underweight in fossil fuel investments.  The Chair referred to previous responses, and he believed the right policy was in place, and as a pension committee it took advice from its professional advisers.  It was explained that the Committee did have to come to decisions and ultimately they were accountable to its scheme members.  

Question 10 - Alan Mossman asked if the withdrawal of subsidies to the fossil fuel sector would jeopardise the value of fossil fuel investments?

The Chair replied that to some extent that may well be the case, but it was necessary to recognise that a Government subsidy, maybe to fossil fuels could enhance subsidies to renewables and the investments in energy companies would involve both of those as investments were often for a 10-year period for specific holdings.  If there was a shift in policy, or subsidy there would be a realignment.  in essence it means were holding the investment today because we believe that it remains an investment in a balanced portfolio. 

Question 12, Katherine Holden asked will the Committee direct to divest from fossil fuels now?

The Chairman referred to the previous responses, and stated that the answer was not right now, as it was necessary to comply with the fiduciary duties of the pension funds to maintain a balanced portfolio.  He added that the committee were trying to take a responsible investment position, by sitting around the table and trying to   influence companies as a collective pooled fund through Brunel.  He recognised that was a position that committee may change in the future if it wished to do so.  

Question 13 Katherine Holden asked about the awareness of the committee members on the likely risks of climate change, she wondered if they received more formal training, would they reconsider and take immediate action to divest in fossil fuels now?

The Chair referred to his previous responses and advised that a responsible investment training session was being arranged for the committee in November.