Agenda item

The Committee noted the report and update on implementation of Pooling Investments in Wales.

The Committee agreed to recommend that there should be a scheme member representative position on the WPP JGC.

Mr Latham commented on two aspects of the Wales Pension Partnership (WPP); governance and investments. Mr Latham announced that there had been a lot of recent progress on the governance side, and there had been a number of policies produced (referred to in item 1.01). There was now a business plan for the WPP, a conflict of interest policy, training plan, risk policy and risk register.

Mr Latham raised the ongoing question of whether the WPP should have a scheme member representation, and he announced that this matter is going to be considered at the next Joint Governance Committee (JGC). The Committee discussed this and noted their strong support for this.

In respect of the investment side of the pool, Robeco had been appointed as Voting and Engagement Advisor for the WPP which was a key new appointment for the pool. Mr Hibbert noted that he had previously raised questions and concerns with Mrs Fielder regarding the Committee’s ability to measure the activity of Robeco on the Committee’s behalf. She responded that there was training on this matter the previous day and Mrs Fielder had already raised this point with Robeco.

Given the importance of responsible investment and climate risk, a new Responsible Investment (RI) sub group has been agreed and will report to the OWG on how to implement report and measure progress with these policies. Mrs Fielder would be in the new RI sub group and therefore reporting to the OWG.  Mrs Fielder was pleased with the creation of the new RI sub group and felt it advantageous that the Fund were represented on it.  She noted that the group would be invited to all relevant meetings and Robeco client group sessions. The group had been tasked with looking at the current voting policy in place and Mr Latham followed this by stating that most other pools have a RI officer who is a specialist in this area. Despite Mrs Fielder having an extremely high level of RI knowledge, she did however have several other roles and responsibilities in the Fund as well.

Following approval at the June 2019 Committee meeting, £200 million of Fund assets have been transitioned from Stone Harbour multi asset credit funds to the WPP multi asset credit fund. It was also mentioned that Link and Russell would be attending the next Committee meeting and will discuss emerging markets equities.An original deadline was set as June 2020 within the work plan of the WPP for the emerging market equity sub fund. However, there is now a revised date of May 2021.

Mr Latham explained that a questionnaire was being prepared for constituent authorities with the intention of going to each Committee member. The questionnaire is aiming to gauge each authorities' views of the WPP, and to inform its future focus.

Cllr Bateman noted from the risk management item on page 330 that the WPP governance risk was categorised as significant in the Fund’s risk register. He asked whether the Committee should have concerns on this. Mr Latham answered that the ongoing risk is high as the participating Funds are extremely reliant on third parties because of how the structure is set up. However, it also meant that the Funds are reliant on the performance of WPP's advisers i.e. Russell and Hymans. The risk is higher as the third party operator, Link, currently have some matters that are being investigated by the FCA, which has previously been reported.

            Mrs Fielder reminded the Committee that the investments already made within WPP had been favourable for the Fund. In relation to global equity, the outperformance achieved by WPP compared to the Fund’s previous management arrangements equated to circa £7 million.

Mr Rutherford strongly believed that as a Committee there was a need to continue to support the position that a scheme member representative should be on the WPP JGC given the proportion of assets being managed by WPP on behalf of scheme members. The Committee endorsed this view, as did Mr Everett and also Mrs McWilliam who spoke on behalf of the Clwyd Pension Fund Board

RESOLVED:

The Committee noted the report and update on implementation of Pooling Investments in Wales.

The Committee agreed to recommend that there should be a scheme member representative position on the WPP JGC.