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

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Information Governance Unit| City of Edinburgh Council | Waverley Court
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[Edinburgh City Council request email]| [1]www.edinburgh.gov.uk

 

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City of Edinburgh Council

Mr Ric Lander

Date: 28/06/2016

Our ref: 11870

Dear Mr Lander

Acknowledgement of Request

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

Thank you for your request for information received on 23/06/2016. I can confirm that your request will be processed under the Freedom of Information (Scotland) Act 2002, Environmental Information Regulations (Scotland) 2004, or the INSPIRE (Scotland) Regulations 2009.

You will receive the information requested within 20 working days unless the Council does not hold the information, or there is a reason for it to be withheld. We will write to you in any event.

In some circumstances a fee may be payable and if that is the case we will let you know.

If you have any requirements regarding the format any information should be supplied in, e.g. the language to be used, audio, large print and so on, then please let me know.

If you have any queries or concerns, do not hesitate to get in touch. Please quote the reference number above in any future communications.

To promote transparency and accountability, please note it is the Council’s policy to publish all request details and responses made under the freedom of information legislation. This information will be made available through the Council’s website and will not include your personal details. The disclosure log is available at the following link: http://www.edinburgh.gov.uk/homepage/175....

Further information about your rights and accessing information is available on our website at: www.edinburgh.gov.uk

Yours sincerely,

Information Governance Unit
Level 2:1, Waverley Court, Edinburgh EH8 8BG Tel 0131 200 2340
[Edinburgh City Council request email] www.edinburgh.gov.uk

Information Rights Officer 5, City of Edinburgh Council

Mr Ric Lander

 

[FOI #341500 email]

 

Date: 21/07/2016

 

Our ref: 11870

 

Dear Mr Lander

 

Environmental Information (Scotland) Regulations 2004 - Partial Release of
Information

 

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

 

Thank you for your request for information of 23/06/2016. Your request has
been processed under the Environmental Information (Scotland) Regulations
2004 (EIRs). Unfortunately, the Council is only able to meet part of your
request; this information is released to you now in the format requested.

 

Some of the information you have requested is available at the locations
provided. Under the Regulations, a request for information can be refused
where one or more exceptions apply. In this instance, the Council is
claiming an exception under regulation 6 because some of the information
is already publicly available and easily accessible.

 

If you do not have access to the Internet at home, you may be able to use
facilities at your local public library.

 

Under the terms of the Act, a request for information can be refused where
one or more of the exemptions listed in the Act apply. In this instance,
the Council is claiming an exemption under section 25 of the Act because
the information is ‘otherwise accessible’.

 

If you do have difficulty in accessing the information or if you have any
queries about this letter please contact me quoting the reference number
above.

 

For ease of reference I shall address each of your questions in turn.

 

You asked the following:

 

Q1. 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:

 

A1. Please see details of the Fund’s approach on its website:
[1]http://www.lpf.org.uk/info/68/responsibl...

Qa. 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

Aa. Please see the following Committee papers at
[2]www.edinburgh.gov.uk/cpol  : Pensions Committee Paper 5.7 Statement of
Investment Principles (SIP) June 15 , and ESG papers annually in December
and SIP papers annually in June.

Qb. What action or strategy the fund has agreed upon, to manage and reduce
carbon bubble risk/exposure to fund members?

 

Ab. Please see the Committee papers referred to in 1(a) above.   

Q2. 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?

 

A2. Please see the Committee papers referred to in 1(a) above.   

Q3. 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?

 

A3. There has been no survey - employers and employees are represented on
the Pension Board, which regularly considers ESG policies and practices
(see above).

[3]http://www.lpf.org.uk/lpf1/info/40/how_t...

Q4. 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?

 

A4. Please see the Fund’s website for disclosure of fees
[4]www.lpf.org.uk/annualreport  (Page 35 for Lothian Pension Fund and
Page 70 for Lothian Buses Pension Fund).  Please note the fees are for
both engagement and voting as we do not hold separate information. 

 

Examples of engagement activity are also available on the website:
[5]http://www.lpf.org.uk/info/68/responsibl...

There is also LAPFF engagement newsletters here:
[6]http://www.lapfforum.org/Publications/en... and an example of
engagement on climate change here: 

[7]http://www.lpf.org.uk/lpf1/downloads/fil...

Q5. Have you signed up to the UN Principles for Responsible investment?

 

A5. Yes

 

To promote transparency and accountability, please note it is the
Council’s policy to publish all request details and responses made under
the freedom of information legislation. This information will be made
available through the Council’s website and will not include your personal
details. The disclosure log is available at the following link:

http://www.edinburgh.gov.uk/homepage/175...

 

Your right to seek a review

 

I appreciate that our decision may disappoint you and I am sorry that we
have not been able to release all the information you requested on this
occasion. If you are unhappy with the way we have dealt with your request,
you can ask us to review our actions and decisions by writing to:

 

Head of Strategy (interim)

The City of Edinburgh Council

Waverley Court Business Centre 2:1

4, East Market Street

Edinburgh

EH8 8BG or,

Email: legal.[Edinburgh City Council request email]

 

Please note that your request must be in a recordable format (email,
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your review request within 20 working days of its receipt. Please quote
the reference number above in any future communications.

 

If you are not content with the outcome of the review, you can ask the
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response. The Commissioner can be contacted at:

 

The Office of the Scottish Information Commissioner

Kinburn Castle

Doubledykes Road

St Andrews

Fife

KY16 9DS

Telephone: 01334 464610

Fax: 01334 464611

Website www.itspublicknowledge.info

Email: [email address]

 

 

Yours sincerely

 

Clayton Pratt

Information Rights Officer

 

 

Information Governance Unit

Level 2:1, Waverley Court, Edinburgh EH8 8BG Tel 0131 200 2340

[Edinburgh City Council request email] www.edinburgh.gov.uk

 

 

 

 

 

 

 

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References

Visible links
1. http://www.lpf.org.uk/info/68/responsibl...
2. http://www.edinburgh.gov.uk/cpol
3. http://www.lpf.org.uk/lpf1/info/40/how_t...
4. http://www.lpf.org.uk/annualreport
5. http://www.lpf.org.uk/info/68/responsibl...
6. http://www.lapfforum.org/Publications/en...
7. http://www.lpf.org.uk/lpf1/downloads/fil...

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