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 Worcestershire County 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 successful.

Dear Worcestershire County 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 provide information or 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 risk management 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

Do not Reply - Worcestershire County Council, Worcestershire County Council

1 Attachment

Request For Information #241193

Dear Joel Benjamin

Request for Information – Freedom of Information Act 2000 / Environmental
Information Regulations 2004 

Thank you for contacting Worcestershire County Council.  I acknowledge
your request for information has been received.

Your request is being considered and we will contact you within the
statutory 20 working day timescale.

Yours sincerely

Information Access Team

Corporate Information Management Unit (CIMU)
Worcestershire County Council
[Worcestershire County Council request email] 

This email address is not monitored , please do not reply

show quoted sections

 

Worcestershire County Council

8 Attachments

FOI Request Response

 
Dear Joel Benjamin

FREEDOM OF INFORMATION ACT 2000 - INFORMATION REQUEST REGARDING:  Carbon
Bubble Risk, Pension Fund Fiduciary Duty & Risks To Local Taxpayers
Through LGPS Underfunding and Exposure to Investment Losses in Defined
Benefit Schemes

We have completed our response to this Freedom of Information Request,
please see the letter attached for further information.

Yours sincerely,
Purchase, Lesley (Res, Financial Services)
 

Worcestershire County Council

This email address is not monitored , please do not reply

show quoted sections