Positive Meeting with Pension Fund Director
Sean Ashton and Janet Milton from South Yorkshire Fossil Free!, the divestment arm of Sheffield Climate Alliance, recently met with George Graham, the Fund Director of South Yorkshire Pension Authority (SYPA). We are very grateful to George for sparing two hours of his time to meet with us.
Despite some differences of opinion on divestment vs. shareholder engagement, the meeting was constructive and friendly, and gave both sides the opportunity to hear the other’s point of view.
The discussion was structured around questions submitted to the October 2018 Annual Fund Meeting and around the recent IPCC report with a 12 year deadline to keep warming below 1.5°Celsius.
On the question of sustainable funds and the recent announcement that Merseyside Pension Fund, a similar sized fund to SYPA, had recently invested £400m into a smart sustainability fund managed by State Street Global Advisors (SSGA), George explained that this and other similar funds were passive and that the newly formed Border to Coast Pension Pool (BCPP) preferred active funds. He did say that while no such fund is currently available in the pool that the potential remains to develop such a fund if 3 or 4 members were interested in an active Low Carbon Fund. He expected that because of timescales, any such fund would be a year or two away.
Regarding investments in alternatives, 150 million per year has been set aside for alternatives, including infrastructure and renewables. This is part of a move away from equities. George expects this figure to rise further as part of the upcoming investment review. While George stressed that any investment decisions are based purely on financial reasons, we were encouraged to hear about investments in South Yorkshire projects.
George acknowledged our concerns about a lack of targets in the SYPA climate change policy and stated that this would be addressed as part of a climate working group in the autumn with some measurable targets available for early 2020. He showed us figures that demonstrated that the equity funds transferred to BCPP have a lower carbon footprint than those transferred, and which were better than the benchmark index too. As our main difference of opinion was around divestment vs. shareholder engagement, we put forward the Environment Agency Pension Fund as an example of how to combine a move away from fossil fuel companies with ongoing engagement.
We also spoke about investments in companies with an involvement in fracking. George stated that there were concerns from membership about this and that these concerns would be discussed by the Climate Working Group. He also stated that the Local Authority Pension Fund Forum which represents most of the Local Government Pension Scheme funds and to which all 12 of the Border to Coast funds belong has just agreed to take a more active stance on fracking when engaging with companies in the energy sector to ensure that if they are involved in any way (even in a remote sense through a limited participation in a joint venture) that they are putting in place proper controls around issues such as methane leakage. The Forum is also revising its policies to reference the latest IPCC report as the context for influencing companies’ environmental behaviour. While any move towards stronger governance with regard to fracking is to be welcomed, we prefer a divestment stance with regard to companies involved in fracking.
Finally, we talked about the IPCC report and whether SYPA could significantly lower the carbon intensity of its fund in the timescales needed. All parties acknowledged that climate change is one of the biggest challenges of the 21st century. While George hopes for significant movement within 12 years he also acknowledged that the change might not be as fast as we would like. He agreed that there may be a tipping point where the speed of change might accelerate but obviously doesn’t know when that would happen (or he’d be a very rich man!).
It will be interesting to see whether the very recent declaration by Sheffield City Council that we are facing a Climate Emergency may have a bearing on the speed of change?