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

Response to this request is delayed. By law, Wirral Metropolitan Borough Council should normally have responded promptly and by (details)

Dear Wirral Metropolitan 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

Paterson, Lynette M., Wirral Metropolitan Borough Council

Dear Mr Benjamin,


I refer to the request for information contained in your email of 12
December. I consider that some of the queries contained in your request
come within the remit of the Freedom of Information Act 2000, (“ FOIA”)
whilst other queries should be considered under the Environmental
Information Regulations 2004(“EIR”), in that they relate to environmental
information. Environmental information is defined in Regulation 2 (a) (b)
and (c)of the EIR as any information in written, visual, aural, electronic
or any other material form on-

(a)  The state of the elements of the environment, such as air and
atmosphere, water soil, land, landscape and natural sites, including
wetlands, coastal and marine areas, biological diversity and its
components, including genetically modified organisms and the interaction
among these elements;

(b)  factors. Such as substances, energy, noise, radiation or waste,
including radioactive waste, emissions, discharges, and other releases
into the environment, affecting or likely to affect the elements of the
environment referred to in (a);

(c)  measures (including administrative measures), such as policies,
legislation, plans ,programmes, environmental agreements ,and activities
affecting or likely to affect the elements and factors referred to in (a)
and (b) as well as measures or activities designed to protect those


FOIA Queries

The Council requires an extension (under Section 10 (3) of FOIA)  to the
20 working day response time in order to consider the public interest test
in relation to certain qualified exemptions under FOIA in connection
specifically with queries 3 and 4. It would assist the Council if you
could indicate whether there is a particular aspect of the current
contract and procurement documents in queries 3 and 4 , that you would
wish the Council to concentrate on, having regard to the volume of
information held by the Council.

EIR Queries

The Council also seeks to extend the period of 20 working days in which to
respond as provided for in Regulation7 (1) of the EIR, which provides that
the Council as a public authority can extend the period where it
reasonably believes that the complexity and the volume of the information 
requested means that it is impracticable either to comply with the request
within the earlier period or make a decision to refuse to do so.


I am therefore writing to inform you that the Council is extending the
period for response in respect of both FOIA and EIR queries  until 17
January next.


Yours sincerely,



Rosemary Lyon,


Law and Governance

Business Services

Town Hall

Brighton Street



CH44 8ED





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Dear Paterson, Lynette M.,

Please note a response to this FOIA is now overdue. Please respond ASAP.

Yours sincerely,

Joel M Benjamin

InfoMgr, FinDMT, Wirral Metropolitan Borough Council

Dear Mr Benjamin

As per my email of 3 January 2017, the period for response was extended until 17 January 2017 and is not yet overdue. A response will be issued on 17 January 2017.

Yours sincerely

Lynette Paterson
Senior Information Management Officer
Business Services - Digital

Wallasey Town Hall
Brighton Street
CH44 8ED 
Tel: 0151 691 8201
[Wirral Borough Council request email]

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