Correspondence with investment consultants & information on managing pension fund climate risk

The request was refused by Croydon Borough Council.

Dear Croydon Borough Council,

Please provide the following information in relation to Croydon management of pension fund climate risk, & information & advice on same provided by external investment consultants including (but not limited to) Aon, Mercer,  Allenbridge Epic and Hymans Robertson.

1) Please provide emails & correspondence between council employees  (Croydon finance function + responsible investment & pension fund mgmt), procurement, elected members (on pension fund committee), scheme members & external investment consultants on climate risk between 2018 and 2023

2) Please confirm if specific advice or information on climate risk has been sought by Croydon and received from Mercer, or other such external investment consultants? - If so please provide copies of this information. (key search terms include "climate risk", "physical risk", "asset allocation" and "fossil fuels")

3) Please provide the following data points in MS Excel format in relation to each external climate risk analyses undertaken on the councils investment portfolio, noting the date/ year + provider of each analysis:

i) Warming scenarios applied, i.e 2degC, 3degC, 4,degC, 5degC, 6degC & year in which it is suggested each warming threshold considered by the scenarios will be reached?

ii) Projected gains or losses for the portfolio &/or GDP activity for each scenario/year assessed

iii) Specifics of any change(s) to asset portfolio allocation recommended by the consultants to reduce the risk of future financial losses and/or to reduce financed emissions across the portfolio.

Yours faithfully,

Joel M Benjamin

croydon@infreemation.co.uk, Croydon Borough Council

Information Team Croydon
Digital Services
Assistant Chief Executive Directorate
Bernard Wetherill House
7th Floor, Zone B
Croydon
CR0 1EA

Contact: Information Team
[Croydon Borough Council request email]

 

NOTE: Please do not edit the subject line when replying to this email. If
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DEAR Joel M Benjamin

 

Freedom of information request - FOI/7268

 

Subject: Correspondence with investment consultants & information on
managing pension fund climate risk

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Kind Regard

Information Management Team

 

Croydon Digital Services

Assistant Chief Executive Directorate

 

7th Floor, Zone B

Bernard Weatherill House

8 Mint Walk

Croydon CR0 1EA

Joel M Benjamin

Dear [email address],

A response to this request is now long overdue. Please respond ASAP.

Yours sincerely,

Joel M Benjamin

croydon@infreemation.co.uk, Croydon Borough Council

Information Team Croydon
Digital Services
Assistant Chief Executive Directorate
Bernard Wetherill House
7th Floor, Zone B
Croydon
CR0 1EA

Contact: Information Team
[Croydon Borough Council request email]

 

NOTE: Please do not edit the subject line when replying to this email. If
you have a processing request, please ensure you quote that reference in
your emails to us.

Dear Joel M Benjamin

FOI/7268

Subject: Correspondence with investment consultants & information on
managing pension fund climate risk

 

Thank you for your e-mail. Please accept our apologies for the delay in
responding to you. 

 

We can confirm that the relevant service who hold this information are
working on your request and are aware of the urgency and that it is now
overdue.  We are monitoring its progress and as soon as we receive this
information from them we forward this onto you. 

 

Should we have any further delays we will keep you informed.

Further information about your rights to information is available from the
Information Commissioner's Office at www.ico.org.uk

Kind Regard

 

Information Management Team

 

Croydon Digital Services

Assistant Chief Executive Directorate

7th Floor, Zone B

Bernard Weatherill House

8 Mint Walk

Croydon CR0 1EA

 

croydon@infreemation.co.uk, Croydon Borough Council

Information Team Croydon
Digital Services
Assistant Chief Executive Directorate
Bernard Wetherill House
7th Floor, Zone B
Croydon
CR0 1EA

Contact: Information Team
[Croydon Borough Council request email]

 

Dear Joel M Benjamin

Request FOI/7268

Freedom of Information Request

Your request has been considered under the provisions of the Freedom of
Information Act. Please accept our apologies for the lengthy delay in
responding to you. Specifically, you have requested the following
information:

 

Please provide the following information in relation to Croydon management
of pension fund climate risk, & information & advice on same provided by
external investment consultants including (but not limited to) Aon,
Mercer,  Allenbridge Epic and Hymans Robertson.

1) Please provide emails & correspondence between council employees 
(Croydon finance function + responsible investment & pension fund mgmt),
procurement, elected members (on pension fund committee), scheme members &
external investment consultants on climate risk between 2018 and 2023

We consider that the specific level of data you requested cannot be
retrieved by way of a reasonable search in relevant electronic databases. 
In order to provide this information the Council would need to undertake a
specific piece of work which would exceed the appropriate limit.  The
Freedom of Information (Fees and Appropriate Limit) Regulations 2004
specifies an “appropriate limit” for the amount of time the council needs
to spend undertaking that search.  If the council estimates that the time
taken to locate, retrieve and extract the information requested will
exceed the appropriate limit, then under Section 12 of the Act, it is not
obliged to comply with that request.

The appropriate limit currently specified by the Regulations for local
authorities is £450. This represents the estimated cost of one person
spending two and a half working days in locating, retrieving and
extracting the information from where it is stored.  We estimate that the
cumulative time it would take officers to retrieve the complete records
you are seeking would exceed the appropriate limit. Therefore, we are
unable to disclose the information you are seeking.

 

2) Please confirm if specific advice or information on climate risk has
been sought by Croydon and received from Mercer, or other such external
investment consultants? - If so please provide copies of this information.
(key search terms include "climate risk", "physical risk", "asset
allocation" and "fossil fuels")

The Pension Committee has received advice from its Actuary, Hymans
Robertson when setting the Funding Strategy Statement as below:

Climate risk and TCFD reporting

The Fund has considered climate-related risks when setting the funding
strategy. The fund included climate scenario stress testing in the
contribution modelling exercise for the Council at the 2022 valuation. The
modelling results under the stress tests were slightly worse than the core
results but were still within risk tolerance levels, particularly given
the severity of the stresses applied. The results provide assurance that
the modelling approach does not significantly underestimate the potential
impact of climate change and that the funding strategy is resilient to
climate risks. The results of these stress tests may be used in future to
assist with disclosures prepared in line with Task Force on
Climate-Related Financial Disclosures (TCFD) principles.

The same stress tests were not applied to the funding strategy modelling
for smaller employers. However, given that the same underlying model is
used for all employers and that the local authority employers make up the
vast majority of the fund’s assets and liabilities, applying the stress
tests to all employers was not deemed proportionate at this stage and
would not be expected to result in any changes to the agreed contribution
plans.

The Pension Committee is also in the process of reviewing its Investment
Strategy which will incorporate the consideration of climate change risk.
Mercer are assisting with the review. To date the Pension Committee has
had a training session on ESG beliefs on 21 February 2023 and is due to
have another training session on 25 April 2023 which will cover the
following topics:

 

• Introduction to Responsible Investing
• Approaches to Responsible Investment
• Investment Beliefs & ESG Policies
• Includes a summary of the key findings from the ESG Beliefs Survey and
Workshop
• A look at example ESG Policies
• Exclusions / negative screening
• Climate Change Risk
• What is Climate Risk
• Know your Metrics (Scope 1, 2 and 3)
• TCFD
• Introduction to Climate Scenarios
• Setting a Net Zero path & assessing the transition potential of a
portfolio
• Mercer’s ESG Manager Research Ratings
• Stewardship and engagement
• Next Steps

The work will be completed over the course of 23-24.

The Authority declines to disclose any further detail on the information
you have requested due to Commercial Interests.  Commercial interests
include any information which enables the entity to participate
competitively in a commercial activity, about Croydon Council future
procurement plans, provided during a tendering process [including
information contained in unsuccessful bids right through to the details of
the contract with the success company.] about performance and
implementation, about private sector partners in the financing and
delivering of public sector projects and services.

Prejudices includes damage to reputation or business confidence. Release
of the information you seek is likely to prejudice the commercial
interests of the authority and/or contractor. Therefore, the Council
considers this to be covered by the exemption provided in Section 43 of
Freedom of Information Act.  This exemption applies to information which
if disclosed would, or would be likely to, prejudice the commercial
interests of any person, including the Council.

 

3) Please provide the following data points in MS Excel format in relation
to each external climate risk analyses undertaken on the councils
investment portfolio, noting the date/ year + provider of each analysis:

 

i) Warming scenarios applied, i.e 2degC, 3degC, 4,degC, 5degC, 6degC &
year in which it is suggested each warming threshold considered by the
scenarios will be reached?

ii) Projected gains or losses for the portfolio &/or GDP activity for each
scenario/year assessed

iii) Specifics of any change(s) to asset portfolio allocation recommended
by the consultants to reduce the risk of future financial losses and/or to
reduce financed emissions across the portfolio.

 

We have not commissioned the work, therefore we do not hold this
information.

 

 

The Council publishes Access to Information requests and responses on its
online Disclosure Log. (Any request included within this log will be
anonymised appropriately)

To view the Council’s Disclosure Log, please visit our website available
here:

[1]The Freedom of Information (FOI) Act | Croydon Council
(disclosure-log.co.uk)

 

If you are dissatisfied with the way the Council has handled your request
under the Freedom of Information Act you may ask for an internal review. 
This should be submitted to us within 40 working days of this response. 
You can do this by outlining the details of your complaint by:

 

Email:        [Croydon Borough Council request email]

Writing:     Information Team

London Borough of Croydon

Bernard Weatherill House

7^th Floor - Zone B

8 Mint Walk

Croydon CR0 1EA

 

Any requests received after the 40 working day time limit will be
considered only at the discretion of the council.

If you are not content with the outcome of the internal review, you have
the right to apply directly to the Information Commissioner for a
decision. The Information Commissioner can be contacted at:

 

Information Commissioner’s Office

Wycliffe House

Water Lane

Wilmslow

Cheshire   SK9 5AF

 

Yours sincerely 

Croydon Council

 

 

References

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1. https://croydon.disclosure-log.co.uk/