Latest news & announcements

The economic and societal impact of Covid-19 is now becoming more apparent and poses many additional challenges for companies, consumers, governments and investors alike. In our last newsletter we communicated our plans to directly address the risks posed by climate change. As we start to adjust to the ‘new normal’ it is important we redouble our efforts to transform our portfolio for a lower carbon world.

Amidst the unprecedented market volatility in March, companies responding positively to the challenges of climate change, environmental sustainability and social well-being were able to demonstrate their value. Over the first three months of the year, the Fund’s low carbon global equities outperformed the mainstream equity market and our sustainable equity portfolio experienced roughly half of the severe declines suffered by its benchmark.

We continue to make progress in the following areas, which remain critical if we are to achieve our ambitious climate change goals:

We are currently consulting on our draft Investment Strategy Statement (ISS) with stakeholders.  It is a technical document that is drafted to comply with LGPS regulations and guidance.

The ISS sets out how the Fund will achieve its primary strategic objective of paying the pensions due over time.  This entails balancing the risk within the portfolio between generating returns and protecting capital, recognising our responsibility as a shareholder/investor and how the Fund can contribute to resolving materially financial global issues and at the same time ensuring it maintains affordability for employers. We acknowledge it is difficult to achieve all the differing aspirations and objectives of our stakeholders; our strategy includes those that are aligned with the primary objective and where they do not increase the financial risk to the Fund and our ability to pay pensions.

This Statement incorporates changes resulting from the Fund’s most recent investment strategy review including changes to the asset allocation and the setting of climate change objectives. The setting of explicit climate objectives reflects the Fund’s belief that climate change presents a material financial risk to our assets and managing this risk is consistent with our over-arching fiduciary duty to the scheme members.

Feedback on the ISS from scheme members will be considered alongside comments from other key stakeholders such as the Pension Board, employers and trade unions ahead of the document being finalised in September.

Please submit comments by 12 August 2020 to AvonPF_Investments@bathnes.gov.uk

Draft Investment Strategy Statement

In January we published details of a landmark shareholder resolution co-filed by Brunel Pension Partnership calling on Barclays to set and disclose targets to phase out its financing of fossil fuel companies where they are not aligned with the goals of the Paris Climate Agreement. The outcome of the meeting has been hailed a success with Barclays’ own resolution winning majority support and committing them to becoming net carbon zero by 2050. The shareholder resolution won significant minority support in its own right, prompting the bank to consult with shareholders and explain the views received and actions taken publicly within six months.

The result is a great example of the power of Pooling and highlights now more than ever the value of shareholder engagement as the Fund seeks to deliver on its ambitious climate change objectives.

Further information relating to both resolutions can be found here: https://www.brunelpensionpartnership.org/2020/04/29/from-ambition-to-action-lpgs-investors-ask-barclays-to-firm-up-commitments-on-climate/

Brunel Pension Partnership’s official statement following the outcome of the Barclays AGM can be found here: https://www.brunelpensionpartnership.org/2020/05/07/barclays-climate-resolution-outcome/

Brunel Pension Partnership Limited (Brunel) is one of eight national pooled funds and manages the investment of the pension assets for the funds of Avon, Buckinghamshire, Cornwall, Devon, Dorset, Environment Agency, Gloucestershire, Oxfordshire, Somerset and Wiltshire. Brunel manages circa £30 billion investments on behalf of these 10 Local Government Pension Scheme funds.

The state of play in the finance sector and our role within it means our focus must be on shaping and influencing the investment system to ensure it is fit for purpose. Our priority is to catalyse change at scale, not only through our own efforts but in partnership with others, and by enabling our Clients to be agents of change in their own right.

The new climate change policy – ‘A five-point plan to build a financial system which is fit for a carbon-zero future’ – builds on insights gained in the course of procuring new asset managers for its 10 LGPS clients.