The Scottish Local Government Pension Scheme and its fiduciary duty to manage climate change risk

The request was successful.

To whom it may concern,

In the last year, the Governor of the Bank of England (1), HSBC (2), Mercers (3) and the World Bank (4) have made it clear that climate change is a major and growing financial issue. Mark Carney has said that climate change poses physical, liability and transition risks, which are all increasing.

Therefore, it is in the best interests of the SLGPS to have regard to the financial risks posed by climate change, and take appropriate steps to manage these risks.

We are writing to the Chair of the Pension Committee, or other appropriate Council official, to set out the response of your fund to five questions:

1. What steps is the fund taking to address the financial risks posed by climate change? Is there a formal process for regularly assessing and reducing exposure to these risks? In particular, can you provide details of:
a. When the Board or Pensions Committee has explicitly discussed carbon bubble risk and the financial implications of growing defaults and credit risk for fossil fuel companies; and
b. What action or strategy the fund has agreed upon, to manage and reduce carbon bubble risk/exposure to fund members?

2. The December 2015 Paris Agreement on climate change saw Governments agreeing to keep global warming to well below 2 degrees, which will require the overwhelming majority of the world’s proven fossil fuel reserves to remain unburned, which would lead to substantial stranding of fossil fuel assets held by corporations in which your fund may currently be investing. On April 22nd 2016, the Paris treaty was signed by 175 countries. Since December 2015 how has your pension fund changed its approach to climate change risks, given the Paris Agreement’s significant ratcheting up in the global response to climate change risks?

3. 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?

4. 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?

5. Have you signed up to the UN Principles for Responsible investment?

We are asking these questions of all UK local authority pension funds, as part of a survey to assess whether pension funds’ fiduciary duties are being met in regard to climate change financial risks. If you would be able to respond to these questions by the end of July 2016 we would be extremely grateful. Please accept this letter as a request for information under the Environmental Information Regulations 2004, alternatively the Freedom of Information Act 2000.

Please do contact me if you would require further information.

Yours sincerely

Ric Lander
Friends of the Earth Scotland
5 Rose St, Edinburgh EH2 2PR
0131 243 2718
[email address]

Friends of the Earth Scotland is an independent registered Scottish charity (SC003442).

References

1 Mark Carney Bank of England, 2015. Breaking the tragedy of the horizon - climate change and financial stability. www.bankofengland.co.uk/publications/Pag... . 29 September

2 HSBC, April 16 2015. Stranded Assets: what next? http://www.businessgreen.com/digital_ass...

3 Mercers, 2015. Investing in a time of climate change. http://www.mercer.com/our-thinking/inves...

4 World Bank, 2015. Major Financial Institutions Move to Integrate Climate Change
http://www.worldbank.org/en/news/press-r... December 7th

Highland Council

Case Ref: HC0226-195

 

Dear Ric Lander,

We acknowledge receipt of your request for information under the
FOI legislation received on 24/06/2016.

Subject:

The Scottish Local Government Pension Scheme

 

Request Detail:

To whom it may concern, In the last year, the Governor of the Bank of
England (1), HSBC (2), Mercers (3) and the World Bank (4) have made it
clear that climate change is a major and growing financial issue. Mark
Carney has said that climate change poses physical, liability and
transition risks, which are all increasing. Therefore, it is in the best
interests of the SLGPS to have regard to the financial risks posed by
climate change, and take appropriate steps to manage these risks. We are
writing to the Chair of the Pension Committee, or other appropriate
Council official, to set out the response of your fund to five
questions: 1. What steps is the fund taking to address the financial
risks posed by climate change? Is there a formal process for regularly
assessing and reducing exposure to these risks? In particular, can you
provide details of: a. When the Board or Pensions Committee has
explicitly discussed carbon bubble risk and the financial implications
of growing defaults and credit risk for fossil fuel companies; and b.
What action or strategy the fund has agreed upon, to manage and reduce
carbon bubble risk/exposure to fund members? 2. The December 2015 Paris
Agreement on climate change saw Governments agreeing to keep global
warming to well below 2 degrees, which will require the overwhelming
majority of the world?s proven fossil fuel reserves to remain unburned,
which would lead to substantial stranding of fossil fuel assets held by
corporations in which your fund may currently be investing. On April
22nd 2016, the Paris treaty was signed by 175 countries. Since December
2015 how has your pension fund changed its approach to climate change
risks, given the Paris Agreement?s significant ratcheting up in the
global response to climate change risks? 3. 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? 4. 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? 5. Have you signed up to the UN Principles for
Responsible investment? We are asking these questions of all UK local
authority pension funds, as part of a survey to assess whether pension
funds? fiduciary duties are being met in regard to climate change
financial risks. If you would be able to respond to these questions by
the end of July 2016 we would be extremely grateful. Please accept this
letter as a request for information under the Environmental Information
Regulations 2004, alternatively the Freedom of Information Act 2000.
Please do contact me if you would require further information. Yours
sincerely Ric Lander

 

The Highland Council will endeavour to respond within the legislative time
scale of 20 working days from date of receipt unless further clarification
of your request is required.

Further information on response times can be found at:
http://www.itspublicknowledge.info/YourR...

Yours Sincerely,

 

The Highland Council

 

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Unless related to the business of The Highland Council, the views or
opinions expressed within this e-mail are those of the sender and do not
necessarily reflect those of The Highland Council, or associated bodies,
nor does this e-mail form part of any contract unless so stated.
Mura h-eil na beachdan a tha air an cur an cèill sa phost-d seo a'
buntainn ri gnothachas Chomhairle na Gàidhealtachd, 's ann leis an neach
fhèin a chuir air falbh e a tha iad, is chan eil iad an-còmhnaidh a'
riochdachadh beachdan na Comhairle, no buidhnean buntainneach, agus chan
eil am post-d seo na phàirt de chunnradh sam bith mura h-eil sin air
innse.

Listening * Open * Valuing * Improving * Supporting * Partnering * Delivering
Èisteachd * Fosgailte * Luach * Leasachadh * Taic * Com-pàirteachas *
Lìbhrigeadh

Customer Services - Finance, Highland Council

2 Attachments

Dear Mr Lander

Please see attached our response to your request of 28 June 2016.

Yours sincerely

 

Carolynn Baker

Customer Services Officer

Finance Service

Tel:  01463 702036

Fax: 01463 702088

Email [1][email address]

          [2][email address]

 

 

Unless related to the business of The Highland Council, the views or
opinions expressed within this e-mail are those of the sender and do not
necessarily reflect those of The Highland Council, or associated bodies,
nor does this e-mail form part of any contract unless so stated.
Mura h-eil na beachdan a tha air an cur an cèill sa phost-d seo a'
buntainn ri gnothachas Chomhairle na Gàidhealtachd, 's ann leis an neach
fhèin a chuir air falbh e a tha iad, is chan eil iad an-còmhnaidh a'
riochdachadh beachdan na Comhairle, no buidhnean buntainneach, agus chan
eil am post-d seo na phàirt de chunnradh sam bith mura h-eil sin air
innse.

Listening * Open * Valuing * Improving * Supporting * Partnering * Delivering
Èisteachd * Fosgailte * Luach * Leasachadh * Taic * Com-pàirteachas *
Lìbhrigeadh

References

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2. mailto:[email address]

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