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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

Money and Pension Service launches Money Navigator tool

The Money and Pension Service has launched a new online tool to help people navigate their finances in the wake of the coronavirus. The Money Navigator tool, available on the Money Advice Service website, asks people a short series of questions about their financial situation, before providing guidance which is personalised according to their needs. It will highlight areas where they should consider taking action most urgently to avoid money problems later on.

As well as helping people who are looking for support in a specific area, the tool will also help those who might be in a better financial position due to COVID-19 and want to know what to do with any savings they may have built up. The Money Navigator tool is available at the following location: https://www.moneyadviceservice.org.uk/en/tools/money-navigator-tool

Local Government Association (LGA) publish McCloud member FAQs

When the Government reformed public service pension schemes in 2014 and 2015 they introduced protections for older members. In December 2018, the Court of Appeal ruled that younger members of the Judges' and Firefighters' Pension schemes had been discriminated against because the protections did not also apply to them.

The Government has confirmed that there will be changes to all main public sector schemes, including the Local Government Pension Scheme (LGPS), to remove this age discrimination. This ruling is often referred to as the 'McCloud judgment' after a member of the Judges' Pension Scheme involved in the case.

The changes will apply to members who were in the scheme on 31 March 2012 and also have membership after 31 March 2014 (without a break of more than five years in any public service pension scheme).

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

Brunel Pension Partnership - 2020 Responsible Investment and Stewardship Outcomes Report

Brunel Pension Partnership, today issued their 2020 Responsible Investment and Stewardship Outcomes Report, acknowledging the significant contribution made by Avon alongside all of the Brunel client funds. The report gives an account of how Brunel have delivered against our joint strategic responsible investment priorities through the year.

https://www.brunelpensionpartnership.org/wp-content/uploads/2020/06/Brunel-2020-Responsible-Investment-and-Stewardship-Outcomes-Report.pdf

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