Financial Links with or Investment in Nuclear Weapons

The request was successful.

Dear Kingston upon Thames Borough Council,

In accordance with the Freedom of Information Act 2000, I'd be most grateful if you can provide me with the following information:

1) Whether your pension fund(s) has any exclusion criteria against indiscriminate weapons, weapons of mass destruction, or nuclear weapons
1a) What such exclusion criteria are, if any
1b) The amount invested in your pension fund

Please be advised: if another body is responsible for pension provisions, I would still like a response to the questions below.

I would also like a response to the questions below if you ARE responsible for your own pension.

2) A list of any non-pension investments funds, whether they have any exclusion criteria against indiscriminate weapons, weapons of mass destruction, or nuclear weapons
2a) What such exclusion criteria are, if any
2b) What amount is currently invested

3) A list of banks currently holding funds for you and an approximate amount held by each bank.

4) Whether the council has any internal exclusion policies relating to investment in, or banking with institution that are financially linked with, indiscriminate weapons, weapons of mass destructions, or nuclear weapons.
4a) What such exclusion policies are

Yours faithfully,
Simon Ramacci

RBK FOI, Kingston upon Thames Borough Council

Dear Simon Ramacci,
FREEDOM OF INFORMATION ACT 2000 - INFORMATION REQUEST - REF NO -
FOIK1580 (please quote in correspondence)
I acknowledge your request for information received on 11/04/2022 relating
to  Financial Links with or Investment in Nuclear Weapons.
Your request is being considered and, if it is held, you will receive the
information requested within the statutory timescale of 20 working days as
defined by the Freedom of Information Act 2000, subject to the information
not being exempt or containing a reference to a third party.
If appropriate, the information may be provided in paper copy, normal font
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For your information, the Act defines a number of exemptions which may
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case, including your rights of appeal.
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Please be advised that in line with the Royal Borough of Kingston's
commitment to transparency, in due course an anonymous copy of your
request and our response may be published on our website.
Yours sincerely,

FOI Team

Royal Borough of Kingston upon Thames
London Borough of Sutton
[1]www.kingston.gov.uk
[2]www.sutton.gov.uk

show quoted sections

Alex Essilfie-Bondzie,

Dear Simon Ramacci,

 

FREEDOM OF INFORMATION ACT 2000 - INFORMATION REQUEST - REF NO - FOIK1580

 

I refer to your request for information received on 11/04/2022 concerning
 Pension Investments (Financial Links or Investments with Nuclear
Weapons).

 

Your request is as follows:

 

1) Whether your pension fund(s) has any exclusion criteria against
indiscriminate weapons, weapons of mass destruction, or nuclear weapons

The Royal Borough of Kingston upon Thames Pension Fund (RBKPF) is part of
the Local Government Pension Scheme (LGPS), and is administered by the
Royal Borough of Kingston upon Thames (the Council). RBKPF is a separate
entity to the Council.

RBKPF takes responsible investment issues extremely seriously. The Fund’s
Investment Strategy Statement, sets out its Responsible Investment Policy,
which can be found [1]here. Investments are constantly under review to
ensure compliance with this policy. 

The Council has delegated the management of the Fund’s investments to
professional investment managers, appointed in accordance with the LGPS
Regulations. 

All of the Fund’s directly appointed managers have exclusion criteria in
place. 

RBKPF had 28% of its fund managed by the London Collective Investment
Vehicle (LCIV), a UK Local Government Pension Scheme (LGPS) asset pooling
company. LCIV’s approach to stewardship, including controversial weapons,
sits within its wider approach to Responsible Investment and active
engagement. LCIV is a signatory to the UNPRI as are their investment
managers. 

LCIV does not have a separate exclusion policy in respect of all funds but
expects their investment managers to exclude companies in line with the
UNPRI definition of Controversial Weapons (see 1a).

Breakdown

Directly appointed managers: 

All of the RBKPF directly appointed equity and bonds’ professional
investment managers (listed below) have an exclusion policy in place.

• Columbia Threadneedle (global equity pooled fund)

• Fidelity (global equity segregated fund)

• Janus Henderson (All Stocks Credit Bonds pooled fund & Total Return Bond pooled fund)

• LGIM (Future World Equity pooled fund)

LCIV Managers:

Furthermore, as at 31 March 2022, RBKPF had 28% of its fund managed by the
London Collective Investment Vehicle (LCIV), a UK Local Government Pension
Scheme (LGPS) asset pooling company. LCIV’s approach to stewardship,
including controversial weapons, sits within its wider approach to
Responsible Investment and active engagement. LCIV is a signatory to the
UNPRI as are their investment managers. 

LCIV does not have a separate exclusion policy in respect of all funds but
expects their investment managers to exclude companies in line with the
UNPRI definition of Controversial Weapons (see 1a).

The LCIV sub-funds within the RBKPF are as follows, and where applicable
their ESG exclusion criteria is also provided (under 1a).

• LCIV Global Total Return

• LCIV Diversified Growth Fund

• LCIV Absolute Return Fund

• LCIV Multi Asset Credit (MAC) Fund

• LCIV Global Bonds Fund

1 a) What such exclusion criteria are, if any

Columbia Threadneedle 

• Signatories to the United Nations Global Compact (UNGC), and do not invest in controversial weapons, indiscriminate weapons, weapons of mass destruction, or nuclear weapons.

Fidelity 

• Those issuers with involvement in the following categories of controversial weapons the use of which is prohibited by international treaties or conventions:

◦ Cluster munitions

◦ Landmines

◦ Biological weapons

◦ Chemical weapons

◦ Blinding laser weapons

◦ Incendiary weapons

◦ Non-detectable fragments

• Nuclear weapons for non-signatories of the Treaty on the Non-Proliferation of Nuclear Weapons, specifically:

◦ Manufacturers of nuclear warheads and/or whole nuclear missiles

◦ Manufacturers of components developed and/or significantly modified for exclusive use in nuclear weapons

◦ Derives more than 5% revenue from nuclear weapons

• Includes issuers that produce exclusive delivery platforms/components only.

Janus Henderson (All Stocks Credit Bonds pooled fund & Total Return Bond
pooled fund)

Total Return Bond is a Luxembourg SICAV, it employs exclusions on
involvement in financing of cluster munition weapons or explosive
submunitions (as required by Luxembourg law).

LGIM 

Excludes perennial violators of the UNGC, and manufacturers
of controversial weapons. 

LCIV

• The expectation is that their investment managers will exclude companies in line with the UNPRI definition of Controversial Weapons as stated in the following international conventions:

• The Ottawa Convention on anti-personnel landmines, which entered into force on 1 March 1999

• The Oslo convention on cluster munitions, which entered into force on 1 August 2010

• The convention on the Prohibition of the Development, Production and Stockpiling of bacteriology that entered into force on 26 March 1975. Biological and Toxin Weapons and on Their Destruction (BTWC), which entered into force in 1975.

• The Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on their Destruction (CWC), which entered into force in 1997.

• The Treaty on the Non-Proliferation of nuclear weapons (NPT), rigorously controlled by the United Nations that entered into force on 5 March 1975.

• The Council Regulation (EU) 2018/1542 of 15 October 2018 concerning restrictiveMeasures against the proliferation and use of chemical weapons.

• RBK sub-funds, which within their ESG criteria highlight where there are any defence and controversial weapons criteria, are as follows:

• LCIV Global Bond Fund - When investing in investment grade global corporate and credit instruments, the ACS Manager will not invest in instruments whose issuers derive more than 10% of their revenue from any of the following activities: adult entertainment, thermal coal mining and generation, tobacco, weapons, oil sands or oil and gas (sustainable bonds from these issuers, including but not limited to green, sustainability linked, and social bonds are exempt). The ACS Manager will also not invest in instruments whose issuers have been assigned a red flag in the MSCI ESG Controversies Assessment, have failed the MSCI Global Norms Screening, are in the bottom 15% of the Transparency International Corruption Perceptions Index, are in the bottom 15% of the World Bank Worldwide Governance Control of Corruption Index, have a score below 7 on the Freedom House Freedom Index or have sanctions imposed against them by the UN Security Council.

• LCIV MAC Fund - The Sub-Fund invests in the CQS Credit Multi Asset Fund (CMA) and a delegated account. ESG criteria for CMA are summarised below. The delegated manager integrates ESG through the consistent consideration of material ESG factors into the investment research process. Material ESG factors may include but are not limited to climate change risks, social inequality, shifting consumer preferences, regulatory risks, talent management or misconduct at an issuer, among others.

1 b) The amount invested in your pension fund

The total RBKPF amount invested as at 31 March 2022 was £1,119.48
million.  

2) A list of any non-pension investments funds, whether they have any
exclusion criteria against indiscriminate weapons, weapons of mass
destruction, or nuclear weapons

• Federated Prime Fund

• Goldman Sachs Money Market Fund

• Morgan Stanley Money Market Fund

• Royal London Enhanced Cash/Cash Plus Fund

The principal activities of above Funds are: 

• a. Acting as the authorised corporate director (“ACD”) of Federated Hermes Cash Management Funds (the “ICVC”), a UK authorised UCITS which is an umbrella scheme comprising a number of sub-funds whose currently active sub-funds comprise money market funds 

• b. Providing money market investment management services, including by acting as a sub-adviser to collective investment schemes and separate accounts (individual clients) 

• c. Providing trade finance investment management services, including by acting as sub-adviser to collective investment schemes 

• d. Providing emerging market debt investment management services, including by acting as sub-adviser to collective investment schemes; and conducting investment research on trade finance and emerging market debt.

• As can be seen from the activities described above, portfolios under management by the Funds principally involve investment in highly rated money markets and debt instruments. In view of this, at the present time, although the Funds  support the UK Stewardship Code, the Funds are of the view that the Code is not of direct relevance to their businesses. If the Fund’s investment strategy changes in such a manner that the provisions of the Code become relevant, this disclosure will be amended accordingly.

2a) What such exclusion criteria are, if any:

None

2b) What amount is currently invested - As at 31st March 2022, the amount
invested in the various funds are listed below:

Fund £
Federated Prime Fund 3,630,000
Goldman Sachs MMF 12,300,000
Morgan Stanley MMF 14,620,000
Royal London Enhanced Cash/Cash Plus Fund 5,000,000

3) A list of banks currently holding funds for you and an approximate
amount held by each bank.

As at 31st March 2022, the total amount invested with banks was £25
million.

Investment with Banks £
National Westminster Bank 5,000,000
Development Bank of Singapore 5,000,000
Goldman Sachs International Bank 5,000,000
Australia & New Zealand Banking Group 5,000,000
Landesbank Hessen-Thuringen Bank 5,000,000

4) Whether the council has any internal exclusion policies relating to
investment in, or banking with institutions that are financially linked
with, indiscriminate weapons, weapons of mass destructions, or nuclear
weapons. 

While the Council does not expressly state its exclusions relating to
investments in its investment policy, the Council’s investment policy has
regard to the following: -

 a. Department of Levelling Up, Housing and Communities’ Guidance on Local Government Investments (“the Guidance”)

 a. CIPFA Treasury Management in Public Services Code of Practice and Cross Sectoral Guidance Notes 2017 (“the Code”) 

 a. CIPFA Treasury Management Guidance Notes 2018  

4a) What such exclusion policies are

Not Applicable. A copy of the Council’s Investment Strategy for 2022/23
can be found on page 110 of the published budget for 2022/23 using the
link found [2]here.

If you are unhappy with the way in which your request has been handled you
have the right to ask for an internal review.  Please notify us in writing
as soon as possible with the grounds upon which you feel the appeal is
justified to: [3][Kingston upon Thames Borough Council request email] or by post to Customer Care,
Guildhall 2, Kingston upon Thames, Surrey, KT1 1EU.

We aim to respond to you within 20 working days of receiving your request.
If it is going to take longer we will let you know.

 

Should you still be dissatisfied with the outcome you have the right to
refer to the Information Commissioner: Wycliffe House, Water Lane,
Wilmslow, Cheshire, SK9 5AF [4]www.ico.org.uk

 

Yours sincerely

Alex Essilfie-Bondzie
Head of Commercial Finance & Investments

Resources Directorate

Shared Finance Service for Sutton and Kingston

London Borough of Sutton

T: 020 8770 5310
E: [5][email address]
Disclaimers apply, for full details see : 
(https://www.sutton.gov.uk/info/200436/cu...)

References

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