Issue - meetings

Responsible Investment Roadmap

Meeting: 09/06/2021 - Clwyd Pension Fund Committee (Item 6)

6 Responsible Investment Roadmap pdf icon PDF 153 KB

To provide Committee Members with an update, to enable recommendations to be discussed, in respect of strengthening the Fund’s climate change commitments and the availability of a sustainable equity investment option through the Wales Pension Partnership

Additional documents:


(a)  The Committee agreed to adopt a 2050 Net Zero ambition for the Fund’s investment strategy, noting this may be updated to an earlier date following further consideration and analysis.

(b)  The Committee agreed the high level net zero work plan or roadmap as detailed in 1.07. This roadmap laid out the next steps required to set net zero target(s) underpinned by a credible implementation plan.

(c)  The Committee agreed to formally request that the Wales Pension Partnership offer an Active Sustainable Global Equity Sub-Fund and that the necessary project to construct this Sub-Fund commences as soon as possible.




            Mr Latham stated that the two key responsible investment priorities that were being considered within this item of the agenda were setting and meeting climate change objectives and identifying sustainable investment opportunities. In relation to the first of these, the Committee were being asked to agree to adopt a 2050 net zero ambition for the Fund’s investment strategy, however, Mr Latham made it clear that 2050 is the latest date that they would aim to achieve this by and hoped that further analysis would allow them to set a date earlier than 2050 and the second recommendation was for the Committee to agree the road map which included this further analysis


In relation to the second priority, Mr Latham explained that the Fund’s investment advisor believed that sustainable global equities should form a material part of the Fund’s equity portfolio. Therefore, he outlined the recommendation for the Committee to formally request the Wales Pension Partnership to offer an Active Sustainable Global Equity Sub-Fund. Given that this would need to go through the JGC and the other Funds in the WPP, the timescale for completion is expected to be approximately 12 to 24 months.


            Mr Gaston summarised the progress that the Fund had already made in relation to climate change.  He explained that a net zero target referred to achieving net zero emissions by balancing carbon emissions with carbon removal. The three key reasons for an investor to adopt a net zero target are as follows:


-       Climate change science tells us that there are c10 years left to limit and mitigate the worst effects of climate change. Currently, we are on track for 2.9 degree warming by 2100. However, the Paris Agreement aims to limit warming to well below 2 degrees. To achieve this there needs to be an overall reduction in emissions of 45% by the year 2030 (based on 2010 levels) according to the IPCC — Intergovernmental Panel on Climate Change.

-       Secondly, momentum is growing across different stakeholders, markets and technology. For example, technology developments have led to falling costs for wind and solar energy generation, and these are increasingly outcompeting fossil fuel alternatives such as coal.

-       Lastly, it is likely we will see a form of a low carbon transition from the current economic model, which is reliant on fossil fuels, to a greener version of the economy.


Mr Gaston stated that TCFD stood for The Task Force on Climate-related Financial Disclosures. This is an international framework providing a number of climate change disclosure recommendations. It is expected to form the basis of the upcoming LGPS regulations that the Fund will need to adhere to.


Mr Gaston explained that when implementing a net zero target, the Fund would need a plan that includes credible, achievable targets as well as being able to meet financial targets. There were four steps involved in creating a plan:


1.    Calculate the baseline – this includes current emissions, transition capacity and green exposures.

2.    Analyse portfolio possibilities for implementing a  ...  view the full minutes text for item 6