Issue - meetings

The Committee noted and commented on the Carbon foot printing presentation.

Mr Buckland introduced the session by reminding the Committee that when the revised investment strategy was agreed by the Committee in February 2020, a new formulated Responsible Investment (RI) policy was also agreed. He added that the RI Policy contained a number of key areas of focus and included a statement on Climate Change. The Fund recognises the importance of addressing the financial risks associated with Climate Change through its investment strategy, and recognises it as a financial risk.

The RI Policy also recognised the multitude of potential areas on which to focus, and therefore agreed 5 strategic priorities for the next 3 years (2020-2023).  One of these priorities was to evaluate and manage carbon exposure. Mr Buckland finished by commenting that the session today would look at the results of the carbon foot printing exercise that Mercer had undertaken on the Fund’s equity assets. Prior to presenting the results Mr Gaston would start with an educational session, designed to aid the Committee’s understanding of the results.

Mr Gaston from Mercer presented a detailed training session to help the understanding of the Committee members regarding carbon foot printing. He considered the issue of Climate Change, and global warming and noted that at present the world is on track for circa + 3?C of warming before the end of the century, and so he concluded that there needs to be more work done globally to meet the ambition of the Paris Agreement. He continued to consider the practicalities of measuring a carbon footprint, and looked at the metrics on which to focus, and addressed the issue of Scope 1, 2 and 3 emissions and how these are assessed.

Mr Gaston then moved on to consider the results of the analysis for the Clwyd Pension Fund. To start he addressed the issue of coverage across the asset classes, and noted that at the moment the analysis was limited to public equity investments, with some information available for fixed income and property investments.

To put this into context Mr Buckland reminded the Committee of the current investment strategy and noted that for the carbon footprint analysis Mercer had covered listed equity (10% Global equity, 10% Emerging Markets equity) and most of the TAA/Best Ideas portfolio. Given that the Fund is diversified and has exposure to private markets, Mr Buckland emphasised the difficulty of analysing carbon foot printing in respect of this. Mr Gaston moved on to note that when the carbon footprint was analysed at 31 March 2020 18.6% of the Fund was able to be assessed, and at 30 September 2020, due to changes in asset mix, the proportion analysed had increased to 26.5% of the Fund.

Mr Gaston focussed on the findings on the executive summary. He mentioned that the listed equity portfolio is marginally more carbon efficient than the MSCI ACWI global benchmark. There was also a reduction in carbon intensity of c9% which was partly driven by the reduction in carbon intensity in the assets now held with  ...  view the full minutes text for item 120