Issue - meetings

(a)          The Committee agreed the changes to the Fund’s Strategic Asset Allocation.

(b)          The Committee voted to defer the approval of the Investment Strategy Statement to the June Committee meeting to allow further advice to be received on a potential amendment to the current draft Statement.

            Mr Harkin of Mercer presented the recommendations following the Investment Strategy Review, and the proposed Investment Strategy Statement (ISS), highlighting:

-       The process of the ISS review had been delayed slightly due to the impact that the previous Chancellor’s mini budget had had on the UK Government Bond market and other factors which had destabilised the UK market.

-       The impact of pooling and the Fund’s transition to employing capital through the WPP.

-       Current themes including energy crisis, geopolitical events, inflation, and the opportunity to benefit from transitions.

-       The role of the current asset classes including the Cash & Risk Management Framework which holds an important background role hedging risks for the Fund

-       The Fund’s expected return was in excess of the discount rate required by the Fund Actuary.

            Mr Harkin explained the reasons for the minor changes to the asset allocation which included:

-       Reducing the emerging markets equities component from 10% to 5%. The excess 5% would be moved to Developed Market Equities, which would ultimately be invested in the WPP Global Equity Sustainable fund.

-       Reducing the Hedge Fund allocation from 7% to 5%. The excess 2% would be allocated to the Local/Impact Fund.  Mr Dickson added that as well as reflecting the Fund’s sustainable and impact philosophy, this 6% Local/Impact allocation would align with, and exceed, the Government anticipated plans to introduce a mandatory 5% local deployment of assets, with ‘local’ meaning within the UK.

            Mr Hibbert commented, regarding the Levelling-Up and Impact investment, the difficulty that affordable/social housing impact will be focussed in the South-East, so there would be a lack of investment opportunities centred elsewhere in the UK.

            Mr Hibbert also asked for the Tactical Allocation Portfolio Terms of Reference referred to on page 144 to be brought to Committee for review. Mr Harkin agreed and noted that they would be reviewed in line with the proposed work to incorporate a new responsible investment framework to the TAA.

            Mr Hibbert referred to the proposed Investment Strategy Statement (ISS) on Page 155 and requested reference to the non-voting scheme member representative on the JGC be added. Mrs McWilliam also agreed this would be a helpful addition. Mr Hibbert also referred to Page 160 which states “Engagement is the best approach to enabling the change…”, and again highlighted the need for clarity on when a decision on divestment would be made.

            In relation to the recommendations, Cllr Swash commented that he had previously voiced his opinion that the Fund’s Net Zero target date of 2045 was too late. He highlighted that South Yorkshire Pension Authority had agreed a 2030 target. Cllr Swash referenced the proposed ISS (Page 161), highlighting key carbon emissions targets within the Listed Equity Portfolio. Cllr Swash proposed an amendment to this paragraph to add an additional aim to reduce exposure to companies who extract fossil fuels, or whose primary business is the trading of fossil fuels, by 100% by 2030.

            Mrs McWilliam advised the Committee that in order to ensure  ...  view the full minutes text for item 38