Latest news & announcements

2020 Annual Review: Avon Pension Fund Engagement Highlights

Our ESG engagement/stewardship annual review of 2020 is here. This report outlines the engagement activity carried out by EOS Federated Hermes on behalf of Avon Pension Fund – and aims to highlight and quantify all the ESG engagement/stewardship activities carried out throughout 2020.

657 companies were engaged with across 2,419 environmental, social, governance, strategy, risk and communications issues and objectives. The impressive figures held in the report highlight how much of an impact we can have, both for the UK and world beyond.

HSBC shareholder resolution update

Intensive engagement by Brunel and the coalition of investors that filed a climate change resolution at HSBC, calling on them to publish a strategy to reduce exposure to fossil fuel assets on a timeline consistent with the Paris climate goals, has led to the withdrawal of the shareholder resolution. This is in exchange for HSBC’s own board-backed resolution.

Brunel announce intention to back a shareholder resolution calling on HSBC to publish a strategy and targets to reduce its exposure to fossil fuel assets

Fifteen institutional investors with a combined US$ 2.4 trillion in assets under management have filed a climate change resolution at HSBC, alongside 117 individual shareholders. The resolution, co-ordinated by responsible investment NGO ShareAction, calls on HSBC to publish a strategy and targets to reduce its exposure to fossil fuel assets, starting with coal, on a timeline consistent with the Paris climate goals.

If the resolution receives more than 75% of the votes at HSBC’s AGM in April 2021, it would require the bank to publish a strategy and short-, medium- and long-term targets to reduce its exposure to fossil fuel assets on a timeline aligned with the goals of the Paris agreement

This resolution is consistent with Brunel’s previous engagement work on fossil fuel financing and follows the shareholder resolution that was co-filed by Brunel at Barclays last year.

Responsible Investment Annual Report 2019/20

The Avon Pension Fund has published its eighth Responsible Investment Annual Report. The report underlines the Funds recognition that transparency and disclosure of its Responsible Investing Policy and the related activities is an important element of being a responsible investor.

The report details the activities undertaken during 2019/20 by the Fund, our managers and our partners to deliver and support our Responsible Investing Policy.

This year’s key achievements include the doubling of our commitment to renewable infrastructure and increasing our assets allocated to sustainable equities from 3.5% to 10% of all assets.

As we recognise the importance of investor collaboration, another key development we were pleased to make was joining the Institutional Investors Group on Climate Change (IIGCC). This presents us with the opportunity to participate in policy advocacy and portfolio implementation work alongside many like-minded investors and will help us ensure we continue as a leader in the field of responsible investment.

Our Responsible Investment priorities remain unchanged for the coming year as does our commitment to create value for our beneficiaries and at the same time make a positive environmental and social impact.

PDF iconResponsible Investing Annual Report 2019/20

Investment Strategy Statement

Our Investment Strategy Statement (ISS) has now been published after the stakeholder consultation process has been completed.

The ISS is a technical document that is produced to comply with LGPS regulations and guidance. It 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 and recognising our role as a responsible investor and the contribution we can make in addressing environmental, social and governance related issues while ensuring affordability for our 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.

PDF iconInvestment Strategy Statement - September 2020

Focus on Investments: Sustainability and Coronavirus (COVID-19)

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:

Brunel Partnership wins two prestigious environmental finance awards

Brunel Pension Partnership has been named the Pension fund of the year by Environmental Finance. It also picked up another award for ESG Initiative of the Year.

Environmental Finance (EF) is an online news and analysis service set up over 20 years ago to report on sustainable investment, green finance and the people and companies active in environmental markets. Its Sustainable Investment Awards seek to recognise those asset managers, analysts and data providers that incorporate Environmental, Social and Governance (ESG) factors in their investments.

In awarding Brunel Pension Partnership with the prestigious Pension fund of the year EF praised Brunel for its clear and broad climate policy, active engagement, and ongoing push for disclosure improvements.

The second award ESG Initiative of the Year recognises the work Brunel carried out in conjunction with consultancy Chronos Sustainability. Where they developed a climate change framework designed to achieve investment returns whilst being in alignment with the goals of the Paris Climate Agreement.

Draft Investment Strategy Statement

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

PDF iconDraft Investment Strategy Statement

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