Carbon Bubble Risk, Pension Fund Fiduciary Duty & Risks To Local Taxpayers Through LGPS Underfunding and Exposure to Investment Losses in Defined Benefit Schemes

Joel M Benjamin made this Freedom of Information request to Merton Borough Council

This request has been closed to new correspondence from the public body. Contact us if you think it ought be re-opened.

The request was partially successful.

Dear Merton Borough Council,

The Bank of England, HSBC, Citi Bank, Mercers, and the World Bank are clear that climate change is a major and growing financial issue. Bank of England Governor Mark Carney has said that climate change poses physical, liability and transition risks, which are all increasing.

Therefore, carbon bubble risk is now a clear material financial risk, and it is in the best interests of pension fund members to have regard to and actively manage, financial risks posed by climate change.

Additionally, as the individual ensuring compliance with SIP documents and signing off on the pension fund annual accounts, the s151 officer has a fiduciary duty to local taxpayers - who would ultimately be required to bail out the defined benefit LGPS fund, in the event of significant losses suffered in carbon markets, should the LGPS fund not manage carbon risk prudently.

We are therefore requesting the Pension Fund/ Committee/ Board would set out the appropriate response of the fund to the following questions:

(1) Please provide the two most recent versions of the Statement of Investment Principles (SIP)
(2) Will the fund be reviewing its SIP documents to pursue best practice and review carbon risk management and investment mandates in advance of LGPS pooling? If so when?
(3) Please provide current contract and procurement documents for the Investment Adviser(s) to the Pension Fund Committee.
(4) Please provide current procurement and contract documentation for the external fund manager(s) as set out in investment management agreements.
(5) Please provide a list of compliance breaches identified by the Head of Finance/ s.151 officer and brought to the attention of the Pension Fund Committee, during the last three (3) financial years.
(6) What steps have the Pension Fund Committee and Board taken to address the financial risks posed by climate change?
(7) Since the December 2015 Paris COP agreement, Peabody bankruptcy, and Exxon Mobil downgrade, has the pension fund changed its approach to climate change risks and investment in carbon stocks?
(8) Please provide Pension Fund Committee and Board meeting minutes where climate change, and carbon bubble investment risk was discussed, and minuted 2014 - 2016.
(9) Have you surveyed or formally consulted with your individual members or employers for their views on your ESG policies or practices in the last 10 years?
(10) How much does the fund spend on ESG engagement services and can you give any examples of engagement activities relating to climate change/carbon risk from the last 10 years?

We are asking these questions to understand how/ if UK local authority pensions funds fiduciary duties are being met in regard to climate change related financial risks - and to appraise financial risks to taxpayers in situations where fiduciary duty to manage carbon investment risk has been breached.

Yours faithfully,

Joel M Benjamin

foi, Merton Borough Council

Thank you for your email message. We aim to respond to all requests under
the Freedom of Information Act 2000 and Environmental Information
Regulations 2004 within 20 working days.
More information about the way we deal with information requests is on our
web site at [1]www.merton.gov.uk/foi.
 
Information Governance Team
London Borough of Merton.
020 8545 4634
 
 
 

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foi, Merton Borough Council

Freedom of Information Act 2000/ Environmental Information Regulations 2004- Information request

Thank you for your request for information received by us on the 28 October 2016. If you have any future information requests, they can be emailed to [Merton Borough Council request email]

Your request is being considered and the council aims to provide the information requested within 20 working days, providing that the information is not exempt.

More information about the way we deal with information requests is on our web site at www.merton.gov.uk/foi.
If you have any queries or concerns then please contact me at Merton Council, Civic Centre, Morden, SM4 5DX or e-mail [Merton Borough Council request email]

Further information is also available from the Information Commissioner at:

The Information Commissioner's Office, Wycliffe House, Water Lane, Wilmslow, Cheshire, SK9 5AF.

Telephone:0303 123 1113

Website: www.ico.org.uk

Yours sincerely,

Bradley Bright
Information Officer
Information Governance Team
Merton Council

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Dear foi,

This is request is now overdue. Please provide a full response ASAP.

Yours sincerely,

Joel M Benjamin

foi, Merton Borough Council

Thank you for your email message. We aim to respond to all requests under
the Freedom of Information Act 2000 and Environmental Information
Regulations 2004 within 20 working days.
More information about the way we deal with information requests is on our
web site at [1]www.merton.gov.uk/foi.
 
Information Governance Team
London Borough of Merton.
020 8545 4634
 
 
 

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foi, Merton Borough Council

Dear Mr Benjamin

Thank you for your email below. Please accept my apologies for the delay.

I have chased the answering officer this morning and asked that a response be prepared urgently and sent to you.

Kind regards

Samantha Godfrey
Information Governance
Information Team
Merton Council

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Dear Merton Borough Council,

Please pass this on to the person who conducts Freedom of Information reviews.

I am writing to request an internal review of Merton Borough Council's handling of my FOI request 'Carbon Bubble Risk, Pension Fund Fiduciary Duty & Risks To Local Taxpayers Through LGPS Underfunding and Exposure to Investment Losses in Defined Benefit Schemes'.

This request is now in excess of 1 month overdue, and has not been answered despite prompts to do so.

Given the large volumes of members funds being managed by the pension fund committee, advisors and fund managers, and the extensive financial risk being carried by local taxpayers who effectively underwrite the defined benefit LGPS schemes and cover losses where the scheme is mis-managed, there is a substantial public interest case in favour of full disclosure.

A full history of my FOI request and all correspondence is available on the Internet at this address: https://www.whatdotheyknow.com/request/c...

Yours faithfully,

Joel M Benjamin

foi, Merton Borough Council

Thank you for your email message. We aim to respond to all requests under
the Freedom of Information Act 2000 and Environmental Information
Regulations 2004 within 20 working days.
More information about the way we deal with information requests is on our
web site at [1]www.merton.gov.uk/foi.
 
Information Governance Team
London Borough of Merton.
020 8545 4634
 
 
 

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Gary Wells, Merton Borough Council

3 Attachments

Dear Sir,

 

Please find below the response to your Freedom of Information Request
dated 28^th October 2016.

 

Reference question 8 - I have attached 3 Committee minutes which are not
available online.

 

Thanks

Gary Wells
Senior Accountant Pension Fund
Corporate Accountancy
Corporate Services Department
Tel: 020 8545 3795
Fax: 020 8545 3767
[1]www.merton.gov.uk

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References

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