Pensions Committee recommendations strengthen climate change commitments
Hackney Council’s Pensions Committee held a special meeting yesterday (28 January) to look in detail at the Fund’s approach to climate change and its investments in companies associated with fossil fuels.
At the meeting, the Committee agreed to endorse a series of recommendations that strengthen and develop its commitment to ensuring that investment decisions take into account these key issues.
Committee Chair, Cllr Robert Chapman, said he understood public concerns regarding climate change and fossil fuel investment, but went on to explain that the Committee has a number of legal responsibilities towards those whose pensions it manages and other groups, including council taxpayers, which means it needs to ensure that the Pension Fund receives the best returns possible in order to meet its pension liabilities.
Recommendations endorsed include:
- A dedicated fossil fuel investment section added to the Investment Strategy Statement, which will outline the Pensions Funds’ formal commitment to take climate change and fossil fuel issues into account.
- The consideration of a 5% investment of the Fund in sustainable/low carbon and clean energy funds.
- Continue to engage with investee companies regarding climate change issues and look for further opportunities to work with others on this and others of ESG importance.
- Review of options to switch some of the existing property mandate into a low carbon property fund.
The Committee also agreed to continue its engagement with the Local Authority Pension Fund Forum and how it can press ESG issues directly with large corporate organisations to influence their decisions. This larger group has a much greater voice to request information about the size of an organisation’s carbon footprint while also driving the take-up of more environmentally friendly and green work practices.
I’m pleased that we’ve been able to officially confirm our ongoing commitment to considering environmental, social and governance issues when making decisions about investments as part of Pension Fund portfolio.
The Committee was very impressed with the approach taken by the Environment Agency Pension Fund and we will look at basing our future strategy on their approach to managing investments in relation to the risks of climate change.
We understand the concerns around local authority pensions funds’ investment in companies related to fossil fuel. Hackney has always promoted greener living but it’s not as simple as just removing our investment. We have legal duties to those whose pensions we manage, as well as local tax payers. The recommendations are not going to change things overnight but this is a positive step that addresses both environmental issues, our legal obligations and will help us to make a real difference in the longer term.