Transcript

So the live stream has started. Yes, thank you. So welcome to this meeting. As you are aware, we are now in the pre-election period for the general election taking place on the 4th of July. And guidance has been issued to members and officers. I'd like to remind members that when presenting reports or asking questions, please refrain from endorsing or referencing any candidates or political parties standing in the elections and any controversial political campaigns or policies related to the election. So if you can turn your microphone only on when you want to speak and ensure you're speaking into it, because otherwise the microphone will switch off. If you could put nobles are switched off or on silent. Now, there is a fire drill planned. Not often you hear that. It is at 2 o'clock. But if the alarm sounds before then, please use the exit outside to go into the car park. And we are being broadcast live. So on to the business of the meeting. We've had apologies from Robert King. And I know Steve Williams is online. Is Steve there? Not yet. He will be joining us online. So the item two minutes of the previous meeting can ask for your approval of those minutes. Thank you. And declarations of interest. Does any member have a declaration of interest in respect of any items to be considered at this meeting? I've got some no's and some silences, so that's great. So the first item, as usual, is questions and petitions. We've got four. And the first one is from Jackie Macy. If you'd like to come forward, please. And you've got the written answer. But if there's a supplementary, then please state so now. Thank you. Thank you. Good morning, everyone. Thank you for your reply, which explained Surrey Pension Fund policy of engagement and indeed engagement with consequences. However, change happened and the judgment given by the Supreme Court yesterday is an example of this. It recognizes the significance of downstream emissions and why these cannot be dismissed. Within minutes, the developer's share price fell by 16%. Perhaps it is time for Surrey Pension Fund to demand that its investment managers urgently assess the value of any investments in the UK fossil fuel sector to quantify the likely downside impact on valuation and assess the risk of holding potentially stranded assets. Thank you. Thank you for the question. And indeed, the Court judgment was but yesterday. I think if I can give you a written reply in relation to that, that would be the best way of saying thank you. So question number two from Kevin Clark. And Kevin, are you online? You are indeed. Thank you. Yes, I am here. Morning, everyone. Well, thanks for the response to my question. But I don't believe it really answered my question, which was focused on fossil fuels. And anyway, still thinking of the next newsletter. I'm thinking that to reassure pension members who will no doubt learn of yesterday's court ruling, surely the next newsletter should state how the Pension Fund is reacting to that decision and reacting to the change of government that's going to happen in the next few weeks. Well, I won't comment on any potential change of government, but I'll give you the same answer that I gave to question one. If we feel it's helpful to put a -- to expand our next newsletter, we will, you know, we'll consider that as you appreciate it is a very new -- a new fact indeed. So thank you for that. Okay, yeah, thanks very much. Thank you. And question three is from Lindsay Corbell [spelled phonetically] and Lindsay, you have a supplementary. Not here, okay. Lindsay, do you have a supplementary? You may be on mute, I'm not sure. I don't think she's on mute. I think she's having difficulty in speaking to us. Must be an IT problem. No, I don't think -- I think there's no supplementary at this stage, but we're open to dialogue as you know, Lindsay. So question number four from Lucianne Cole, and I think Jackie, you're to ask a supplementary here. Yes, thank you. And Luciana writes, thank you for your response. It's good to hear pension for purpose offer a wide range of educational materials. With the general election fast approaching and new developments such as those following the Horse Hill judgment, it would be good to know if there are plans in place to gain more knowledge and expertise on the actions that will subsequently need to be taken as regulations change, such as reviewing the responsible investment policy objective dates. Thank you. Thank you. I'm not quite sure what the question is or the supplementary question, but of course we will be looking at our communications and how we're dealing with climate change and everything else, including the change of government. So I think I have to suggest you watch this space. Thank you. Thank you very much. Thank you. Fine, if we can move on now to the pension fund committee action tracker and forward plan and Neil is going to take this particular item. It starts at page 13 through to 36 in the page numbered pack, but it's 19 in the electronic pack. Thank you. Thank you, chair. I'm just on the action tracker just to bring the committee's attention to two actions that have been completed and will be removed from the action tracker for the next meeting. Moving on to the forward program of works, you'll note in September there is to be confirmed. This is around the piece of work that the officers have been undertaking regarding governance of the fund, specifically in relation to its ongoing relationship with the council and the independence of the fund. There will be a follow-up paper to this. We have been working in concert with the monitoring officer, section 151 officer. We have briefly spoken to the chair about it and we've also taken soundings from internal audit on the basis of their governance review they completed last year in order to meet best practice and internal audit will also be playing a part in this process. So it currently is to be confirmed just to see if we have the time in the diary to be included in the September meeting, otherwise we will be seeking members' attention on a specific meeting to consider this issue. I'm happy to take any questions on any of the actions or the forward program of works from members. Steve, I think you've got your hand up. It's a legacy hand and I think the moment has passed. Okay, thank you. Thank you, Steve. Members, any further comments or questions on this program of work? I mean, what I am pleased about is we do have now quite an extensive program for the next year. So the recommendation is to note the content of the report and make recommendation local pension board if appropriate. So I think there's none and monitor progress on the implementation of recommendations and review and note the changes in the forward plan in Annex 3 and I think you mentioned the governance piece. I think that is an important piece. So with that agreed members. Yep, Richard agreed. Okay. Thank you. Let's move on to item 6 local pension board update and we've got Tim Evans online. And Tim and we've got Neil also and we've got Tom Lewis here to deal with any questions about operations. Hi, good morning. Can you hear me now? No, well just immediately then. Yes. All right. The reason you can now hear me because I went through the technological whiz kid of turning my microphone on which obviously makes life easier for all concerned. So yes, I'm glad you got me so quickly. Just to give you a quick highlights on the report which we've got is item 6 the report as ever summarizes the activities of the Surrey Pensions team in the quarter and highlights the main issues. I'll first draw your particular attention to the slight postponement of the GMP reconciliation work, but that should be completed this year i.e. by March 2025 McLeod continues to rumble on but progress is being made with Altair. The admin performance report and legacy reduction continue to move in the right direction. A lot of this that I'm reporting on is sort of business as usual improvements are being made all the time and work has gone well. However, the main focus of the report relates to the implementation application of the unit for my Surrey financial system. Since this report was prepared obviously in time for this meeting a number of meetings have taken place particularly earlier this month involving senior council officers your chair and myself and including in particular Tom Lewis head of service delivery and Council IT staff who have been very helpful. The latest position is that the iConnect file was received thus avoiding a report to the regulator. However, this is a moving a moving feast and your chair and Neil Auton will be in a better position than me to report an update on the present position. The last I have had reported to me was on June the 7th when things seem to be moving in the right direction and senior officers, Anna Dallasandra in particular have stressed the enthusiasm and determination to get this matter sorted out. But I think chair it's probably more sensible for me because this is the most important item on in this report for me to defer to you and/or Tom who may wish to give a later update to that that I have or that indeed is in the report. Other than that, I don't think I don't think to add as far as the as far as the LPB report is concerned. I commend it to you. Thank you, Tim. Certainly the question of the implementation and production of the annual benefit statements at the end of August, although that seems or seemed when the meeting was being held quite a long way away. There are many steps to get there and the chair of the board and I felt it important enough to formally write to the section 151 officer and express our concern and I think there's been a definite step up in terms of progress but we and and we I think this is an amber item now and it's been very closely monitored. So I'll ask Neil and Tom to bring us up to date with how things are managing looking towards that annual benefit statement. Thank you. Thank you chair. Building on what Tim said, the risk that we were feeling at the time was that the monthly monthly return we normally have the what the March file by the iConnect system was was seemed to be a bit distant Target, but I'm pleased to say it has been submitted and we've carried out the first cut of lot validation checks that we would do as per normal at end of year and there are no major concerns in that file that we would deem to be a problem. It's now going to stop us being able to do the annual benefit statements on time. That's not to say there's not still some data discrepancies that need to be resolved between the council as an employer and sorry in other areas, but the numbers reduced significantly but the information we received now puts us in a position to deliver those benefit statements. So we did the risk rating did get moved to severe but lucky that was only for about three or four days because it came through within that within a time period soon after so yeah, so that's reduced that risk significantly and we're now sort of into ba you as I would say so we will be sharing any discrepancies back with Surrey County Council as an employer by no later than the end of next week just because it's obviously there's a number of employees that we're doing this work for so we need to make sure we're given priority as they come through but it will be given a large level of scrutiny to make sure we're comfortable with that information. Thank you Tom and can I? Thank you chairman as some members may be aware the resources and performance committee task group looking into making recommendations on the my Surrey implementation that report will be finalized this afternoon will be public in a week or so after that. But I'm obviously very concerned about this. I recognize frankly there have been long-standing problems in the payroll not just for this but other things as well and there's been significant improvements in the way that that is managed and hopefully what Tom and Tim are both saying are evidencing that I'm a bit concerned particularly about paragraph 23 new starters not being added. Is that still the case or is that improved as as as part of receiving that file? We've now had the information that allows that for us to issue we've now already issued out those new member packs to alert them so they can now sign up for the portal and the information that many people have been saying is no isn't on their portal for them to see that has now also been updated as part of that data coming through. Thank you very much. Yeah, thank you. Sorry Bob for not seeing your hand there. Could I yeah, could I just ask I mean we have a very good record of providing sort of 99-point high number percent of the annual benefit statements for the August deadline. So could I just ask about other employers and whether there are concerns because clearly number of the with the I connect change and a number of academies dropping out of the response of direct responsibility of the payroll system are those sides properly covered? The short answer is yes, we've had 248 submissions received so far and that equates to 30,500 of the active membership. So there's a it's a huge amount of that and that includes the Surrey there are 108 submissions remaining but that only covers four and a half thousand members. So and there are there's soon to be a I connect file submitted by data plan who is a payroll provider for 54 schools within our scheme and that will actually equate for 2900 of those four and a half thousand. So in terms of getting information back we're in a good position and the team of continuously talking to employers where there's any general discrepancies that they need to close off. So as it stands we're in a good position to carry on this as we would do normally I believe at deferred statements are going out as we speak and then the team will be moving on to the active active statements in the coming next week or so. So that will all start to roll out the door now for members. Thank you Steve Steve Williams. No again I don't know what my hand is doing at the moment on the so apologies. If you don't know I'm sure we don't know. Thank you. Thank you. I could Duncan. Hello. Let me thanks ever so much. I just noticed that as well as the starters the levers don't seem to be coming off. I mean there was a paragraph their same paragraph 23 we're saying that the levers aren't coming off and it just does seem that this sort of unit for issues seem to sort of rumble on I mean it just are we confident that by the end of August all the statements will go out. I mean is there some sort of finishing point or deadline to this that we can be confident that the that the unit for is providing accurate up-to-date and complete information for us so yes, so I the levers information it has been there's two things. It's the I connect file has now come across which carries all of that information to tell us about all the levers that have been missed in that period the levers extract is a slightly different thing that is a supporting file that comes through to allow us to have additional information we required to process benefits. There's been a problem with that file in terms of sometimes accuracy of what's coming through is not right and in some instances we're actually missing the reasons for leaving which been obviously stops us processing benefits in some cases so that that has been an issue we be at the April and May file that's come in now, but everything prior to that we're in a good position to know that we have all of that information the I connect file the important thing is it provides the pay information that allows you to issue the abs I suppose what there is a slight risk of that may happen if we haven't been informed of some of those historic ones is we may issue the wrong type of benefit. So it statement so rather than being a deferred or an active it might go out as an active if it should be a deferred statement there is always that possibility but you kind of get that throughout the whole run of all employers rather than it just being particular to this one. So we are probably paying a lot more attention to this file given the sheer number on it to make sure that we're comfortable with it and doing a lot more checks than maybe we would normally do as part of the end of year process. So in I'd like to say we are relatively confident. I can I couldn't give a I'd be silly to sit here and say it's a 100% guarantee because given the nature of it and we do know that they're going to have to rerun some lever extract reports for us that from October December for some of those reasons of missing lever codes, but we're quite confident now that they're predominantly deferred benefits rather than people looking to retire or ill health of anything like that those ones the more pertinent cases are coming through. It's just yeah, there is always going to be that element of doubt. So I what I'd expect is even if by the end of August there is still some configuration work for the council to do on unit for there's still some data discrepancies that they need to fix I imagine what's going to happen is one that filters through will probably be issue of benefit statement that will go on to the members portal, but we probably won't write to them again to say it's there. They'll just have a renewed one on the system. Tim yeah, thank you. I admit I could tell that the committee takes this as seriously as the board takes it and indeed all the staff take it and as you say it's been elevated up to the section 151 officer and on that note the last written communication I had was on the 7th of June when Anna said that she would continue to modify modest in this fortnight until it's complete and there would be a review well fortnightly as it happens is today June the 21st. So I'm just wondering I haven't seen anything in writing since that I'm just wondering if you have or Neil has or somebody has or whether this is about to arrive because obviously you're sitting on this now the next board meeting is on July the 26th from memory in our really really keeping our eye on this. Tim I've received nothing personally up to 10 o'clock this morning. Let's put it that way. So yeah, but we are clearly monitoring that and Steve Tom, do you want to comment on that? I could just just to give some like we there's been enough that I've been in two meetings in the last fortnight by which Anna our section 151 has been present and I can only say so there it she's 100% supportive of what we're trying to achieve here and obviously in the same breath supporting payroll making sure that they've got their needs. So there's a heavy IT involvement now as well. So it's it they are it does feel like it's all being tied together is high priority and the configuration to make sure that the unit for is calculated calculating contributions right when for example, when people are changing jobs that is due to go into the system for the July payroll that will probably cover off about 95% of the configuration that was required for the LG PS scheme. So it is definitely in the moving in the right direction and then there's definitely it's been given the highest priority from for you know, from the meetings I've been involved in. Thank you. I wanted to give the committee and indeed through Tim to the board that we are closely monitoring this and you can see how you know how involved Tom is to the you know, all the all the permutations of member experience in relation to this so we will continue to do that Neal. It just just to sort of close off the item that members will note. This is still classified as the key risk in the pensions from the risk register. We've no immediate plans to reduce that at all. I would also let the committee know that we have had to either to deploy a key member of my senior leadership team for a significant period of time on this project which is not ideal at all. So we will be continuing to to monitor this very closely, but again, it's not ideal situation for us. We have officers have at all points in the pensions team ascertain to risk assessment of this from the point of view of the breach that it relates to with regard to the pensions regulator. We are currently still comfortable that it is not a material reportable breach, but we will be in keeping that very much under close inspection. Thank you. Could I just perhaps conclude on a on a positive piece of information which is in the report here in terms of the routine processing we can see performance has it's in one of the annexes is up to 88% of the SLA which is a positive improvement on where we've been certainly six or nine months ago and we can see there's a drop in the backlog from about 2200 in the last quarter down to about 1800. So other things are certainly moving in the other direction. So I wanted to draw that to the attention of the committee. So any other any further comments and if not, I will ask the committee to note the support that the committee is giving to the board and make recommendation board if required. I think clearly Tim you will be looking in close detail at this when it comes to the your meeting in July, which is clearly before the deadline. Yeah, so are those recommendations agreed? Thank you very much. And so let's move on to the Surrey pension team overview quarter 4 and this I think is the first time we've received this this report is certainly not detail and it's an overview of the entire service and it is a macro summary of a lot of detail behind it Neil. Yeah, thank you chair and and interesting his members views it as such a says this is this is effectively executive summary of all operations of pension fund over the last quarter you will you will note there are there are three metrics which we have identified as being in below the desired target the investment from performance, which is actually written to the 31st of December. So it's not aligned with some other reports in here, but you will understand that we do have fluctuations in investment performance. So that isn't material concern to follow up on we have had a slight reduction in people this but this is quite a small concern. We've had three people but out of our 72 permanent employers. So this is again as a report says this is will be within normal attrition rates of the team. You'll also note from the annex in the service delivery statistics that has been reduction performance on transfers paid I'll take this opportunity to introduce the four heads of service who are to Lloyd from the investment team Tom obviously service delivery. We've also got Nicole from change management and collect Collins who is interim head of accounting governance after the departure of port it come earlier this week if members have any any deeper questions on any of the statistics in the in this service overview. I'd be very pleased to hear them and general views on whether or not you are approving of the executive report and the way in which we are now presenting it to you as a summary. George yes, thank you. So I mean as a whole I think I think report is quite well structured so no complaints on that front. I think we cover a lot of things I think it I think it is and it gives a very good sort of high-level overview and again, I think you know the general trend of improvement in KPIs is positive particularly consider that most of the only place we've gone back would seem to do largely those affected by issues outside of our direct control. So I think it speaks to you know, a lot of hard work over the past year. One query I did have the funding level and I know we've talked about this previously but dashboard is now showing up as a hundred and thirty percent which of course is very well one of the things part of reason for us being fully funded or over fully funded is a result of actuarial changes that took place recently and of course that those are not within our gift bed dictated by central government. I'm just and I'm not expecting to have the answer at your fingertips, but just out of curiosity if we were to evaluate the fund looking using the previous actuarial assumptions would we still be 100% over 100% funded because what I've noticed of course is that over past few years. We've gone from just over a hundred percent to now quite significantly over a hundred percent which I think is very welcome improvement in the funds position. So just because if you know, even if we have to take a worst factor aerial assumptions, whether we'd still be in that positive fully funded place or not, but again not expecting you to have an answer at your fingertips. There is actually a discussion later on on this but but let's deal with it. No, let's deal with it. Now if we if we can the short answer is no and the detailed answer I'll take I'll pass to my esteemed colleague. Yeah, if we took the same assumptions as 2022, we'd be at 98% compared to now of see the dashboard there was old data at 130. We're now at 135 and I will sort of while we're talking about it rather than come back to it. Later the I view it as a good thing. The reason why it's gone up in this last period is because of the discount rate fluctuations. Just one point of clarity as well come support. Oh, it is very obviously very much connected to the guild right? Trevor thank you chair first. I'm going to thank the officers for the amount of work that's been involved in actually getting to this dashboard which makes things much simpler to see what's going on. What are the arrangements are planned for actually making this sort of information freely available to the members of the fund and is. I'm going to I'm going to defer to thanks Neil at the moment, you know, this is the first time we're presenting it in this way because it's been in development for for some time and many of you will have seen the various iterations. But as we move to be a you it is something that we could certainly consider system in Surrey County Council called Tableau which does allow it to be updated in a live way. The moment information becomes available. It's put in and therefore and it's as up to date as the information that we have at that time. The issue we've had with that is that unfortunately, it doesn't allow anybody with Surrey County who don't need format that is more in our control. So even any changes we make we have to go back through the council which isn't ideal and we're investigating that. We can always put a snapshot in time, which is in fact the one that you get because not all of you do have that. We can always include that within whichever format that we're communicating with members, employers and so forth. If we think that's desirable. I know that Sara has been speaking, Sara, I think he's in the room with you today has been speaking with employers about how they prefer to be communicated with and what they would like to see. So and we're also doing a piece of consumer insight really to understand how our customers view in fact our total service and hoping to get some information out of that in the next sort of quarter, how they might like to be communicated with. So there are some places where we're looking to enhance our communication, but we can certainly take it away and consider adding it to any of the formats we currently have as part of that constant review that we do of our communications and how effective they are. So no immediate plan. Thank you. I know I was thinking that some making a snapshot available intervals to members would probably be the best approach because then if there are any things that have changed allows you to incorporate an explanation of it at the same time rather than giving somebody a live feed which they may not understand what's going on there or it may just be a temporary circumstance and you don't really necessarily need to panic people about something that's just a temporary. Yeah, no worries. I've taken taken a note of that river so I think it will live feed but unfortunately found I didn't have the authority to get into the system to look at it and then and I didn't have sufficient time to you know, get all that unraveled, but I would find some most convenient time in a month, which is not necessarily at the month end, but when you've had the chance to look at the data and update it might be the 10th of the month. I think that would be quite useful to make available to you know, members of the committee and members of the board would be you know, we don't need to be looking at it every day, but monthly is quite a useful snapshot. So if we can take that away and take a look at that. Sure. Could I raise don't see any other hands up but could I raise a question about the would it and it's it's a satisfactory audit, but could I there any comments about that particular audit not sure who's best place to answer that question. There is a is referred to I think chair in the local pensions board report which which brings to the to the board the full audit plan and and recent audit activity. The last order I think was in the service delivery space. Was it not was it? John I have a feeling it might be a trap one on transfers that was done which which had there wasn't there was only some minor areas where guidance notes for the team to use to give a consistent way of doing it across the board because it turned out there was kind of so I think that it was in and that was the only area that needed improvement was just to hone in the guidance notes for the said the team had a consistent don't see any more hands. So it's recommended the pension fund committee notes the contents of this report is that agree? Thank you. Okay, let's move on to the change program quarter for Nicole you're taking this and it's page 59 in the pack electronic version page 65. Thank you. Fabulous. Thank you Nick. I'm assuming everybody has had the opportunity to have a good read of the pack and I so I'm not going to cover every item in detail and simply wanted to highlight some things that we're very proud of in the report on a communication side the new member website do take a look you all that Beth reached out to you to talk to you about the way that you would like to be communicated with it seems that Neil's ebasis are still a hit. So we're going to continue having those and also we have a SharePoint site that is available that that you should have access to please do let us know if you don't we have double checked and we do think you will have it but a lot of information gets stored on there. So if you don't have access to that do let us know and lots of historic documents and various bits and pieces of interest are there so that's a resource for you to have and obviously we've been shortlisted for a number of awards over the recent period think it really just demonstrates the progress that we are making so just wanted to highlight those. From our learning and development perspective you may recall that we implemented last year a staff pulse survey so survey that keeps a pulse on on how people are feeling within the pensions team where we're actually up at the third time of running that if we speak to where we are actually today, but this report of course is retrospective and therefore we are the last one that was completed in the first quarter of this year first calendar year actually putting in place actions to address anything where we felt that we could improve even further. You also may recall that we introduced a lunch and learn format the whole of the Surrey pension team we've had a huge array of topics that have come to that and it's been really really well received and very popular. So we are continuing with that and indeed I think it's booked out for the next sort of three months actually there's no spots free so that has continued to support the direction of travel for us that we want to have within the team. And you may remember the residential training in October of this year that was taken I think to you last this last meeting that you had and we're moving forward with that and are in the process of booking some speakers and finalising the agenda which we would hope to share with you very shortly. From a project side of things one of the so one of the going back to the dashboard one of the people of the three that left was somebody in the projects team, which means that where we were two previously we're now one and we actually had 17 projects that were ongoing so between the two of them that wasn't that was quite manageable but for what we've been really looking very hard at how we focus our project management expertise and and indeed trying to close off some projects that had rumbled on for a little bit longer than we would have desired. So we have actually managed to close off six already of the eight that we were hoping to look at and that's now at a much more manageable list whilst we also consider how we move forward with project management and the best way to deploy that resource. And finally the transformation side of things the digital design team that we came that came in for three calendar year they came up with their report and we've been busy translating that Tom and I into a digital trend year one of that's looking very good, but we realized we needed some further expertise to help us populate the outer years. And so we're engaging on that just as we speak. So the next time we come back, I think we probably have more to share with you about what that total plan could look like and finally the year two strategic plan items have been approved and they are well under way. So again, you should start to see those coming through in later reports. And as I mentioned the Pulse survey, it sort of goes on a cadence of December and June. So it twice per year and in fact because we're in June the Pulse serves actually open right at this minute. So we hope to close that in a couple of weeks. And so potentially in the next time we meet we will have the results of that Pulse survey as well. Those are the highlights from me. I don't know if you have any questions on anything that's there and you think I've said. Thank you Duncan. Lovely just a quick question. Thanks ever so much for that. That was very interesting just under learning and development on item two on page 60 of the hard copy. I was interested to see you've got lunch and learning sessions were presented on motivation and cyber security and I just wondered who was responsible for cyber security. It seems to be an issue which comes up quite frequently these days training program for it. So I can well I can take part of that. It seemed to be the cyber security piece that you were most interested in. Obviously our IT services are provided through Surrey County Council and so they have a suite of cyber security policies that they are adhering to. This was training specific to the pensions areas and anything else that we needed to make our team aware of and yes, indeed we would plan to that that we don't usually make lunch and learns mandatory, but that was one of the only ones so far that we have made and that came arose actually out of an audit finding which indicated that we ought to ensure that we always have regular training on it. And so that was the first of what will training aspect on cyber security in particular. I can see Colette has turned on her camera as well though and may have some additional comments for that. I don't know. Thank you very much. For committee's purposes. Yes, highlighting strongly that actually came out of a recommendation. We can't hear you particularly well. Thank you. Mike's up. It's because my mic was up. My apologies for that. No, I don't have anything to add. Thank you, Nicole. It was really just going to highlight that the cyber security, so as a service, we have had an audit on cyber security. The training was mandatory as a result of that audit, but as Nicole says with there are sorry County Council training and also will be monitoring that continuously. Thank you, Bob. Did you want to make a comment on this? It might be helpful to our colleague. The resource and performance committee looked at performance statistics on cyber security and data breaches this week. Data breaches is extraordinarily running other or other the lack of problems running at a hundred percent. So I'm in Surrey County Council perform extremely well on that. Thank you, Neil. Thank you for that from from Council Hughes, which is very much appreciated. And so just for the committee's attention also that we take a regular cyber security report to to our board as well. Obviously our relationship with the council are pivotal of external partners in our systems provider for our membership which is Hayward's and and also our cut our custodian who manage our money as well as border to go. So so our report to to the board contains all of those key stakeholders. Thank you. Could I just just make a comment? I was going to ask a question because but about the project management it did strike me that with one manager managing 17 projects that did seem overstretched and I'm pleased you have addressed that particular issue and perhaps when we next meet we could have a little bit more information about the the projects which ones have gone back to business as usual and which are the the critical ones you were working on. I think would provide a little more you know substance to to understand the you know, the where the world work is being done in the department that would be helpful. I think. Sure, no worries. Thank you. Any other comments? No, so could I ask that the pension fund committee notes the report? Thank you. Thank you. So the next item item 9 is the pension. Team strategic plan out to turn report 23 24 year. This is on page 63 or 69 of the electronic version Neil your to take this please. Thank you Jay. Yes. This is the first year strategic plan of the new team was built to this committee back in March 2023 and it talks to our our performance against that the year to date from from April to April over that period 23 24. I'm going to take the the report was read just to say that the change team covers projects areas as transformation communications learning and development project management in the accounting governance team it is comprised of finance employer work governance risk and compliance and technical and the investment team. It's it's the investment implementation piece responsible investment piece and the operational efficiency of of reporting and and delivery and in that in that area and in service delivery a quite quite apart from delivering data benefits, which is our sole purpose as a pension fund. It's there has areas of data customer relations systems and over the last year. We've we've we've really hammered through some of the legacy issues. We've had all of the heads of service are here any particular area any particular concerns we can address them to the if you have them. Perhaps I could kick off with one comment myself and this is on page 72 of the recharges which is effectively charges back to individual employers for for I guess specialist transactions. They've been involved in has been a source of concern and I see that's moved back to business as usual. Could you just perhaps comment on that because I think it is an important step we've taken. Yeah, happy to say chair on employer manager. Sarah is here to address that. Yeah. Hi the recharges are being done monthly and quarterly and are being completed as business as usual now. And we've collected historical under charges. Okay. Thanks. That was the short side wanted. Thank you. Okay, could I just then Kelvin. Sorry. I didn't notice your hand. Thank you. Thank you chairman on page 67 with the numbers at the bottom. It says that most of the year there was a project to become a signature as a stewardship code and I just wanted to give a brief update on how that's coming along. Yes, yeah, that was actually Tristan is sat at the end of the room today because he did a lot of that work and you may recall that we brought the stewardship code to the last committee meeting. We've duly applied and so that had to be in by the end of April. So the application has gone in. I think our submission was over a hundred pages on our just our submission and there are obviously other people applying as well. I think you know be overboard on that on that material, so we're just waiting for a response now. There are quite a lot of first year fail rates. And if that does happen, we will get feedback and be able to correct there after in terms of a date when we'll find out we haven't got a set date. I know that the Financial Reporting Council that are reading them. They've lost a few numbers of staff themselves. So we're just waiting for the response now. I just want to draw attention to the comments and this is on page 73 of the of the papers looking at investment transactions. I think the move to the emerging markets Alpha found is you know, very was a very important step. And it did also hopefully lead to a reduction in our carbon footprint. So I just wanted to mention that because I think it's a very important aspect of what we've done on the investment side. And could I just mention on page this is page 75 of the electronic back just wanted to comment on the excellent progress on the legacy rollout. So would you look to when would you look to move you can see the percentages in the in the columns there in when would we look to move this back into our routine processing and I think it would be quite useful to have a kind of a final report on this when we're when we're sort of 98% through there perhaps something that would go to the board initially. I've been quite reluctant to give it a an official date to end it purely down to the fact that we knew we had the unit for full out to come through and now that that's come through we've now got to lock make sure we get that work done, but the signs in terms of progress right now and having spoken to the manager who's looking after the area with confident that somewhere in and around October November. We'd expect the majority of this backlog to be to be or legacy cases to be removed. So we have completely segregated them from day-to-day work. So they stand alone on their own. So the two the two cases are no longer linked. So KPI is backlog and legacy. They don't they're not the same one anymore. So we've completely separated them out so we could control that so we'd like to think around October November. I think what's going to what will what will probably do in the lead up to that around September time is probably take a take stock of what is outstanding and why it's outstanding the likelihood of what we're going to find is whether we're going to get employer communication back on the cases. We've sent them where there's holes in the data. So there's probably going to come a point in which we're going to have to take some assumptions on those records so that we can process them through thoroughly. So I October November I'd say Nick is probably the time we're expecting this to come to an end and then I would say probably September time is probably that point where we'll do that sort of preliminary review of where we stand with what's going to be left over. Thank you. David just to ask what sort of scale are you seeing that being on estimate means a huge or is it what the number of cases you mean? I was thinking in monetary terms actually. Well, I mean, I'd have to look I'd have to I don't have it to hand but we did would either would do. Yeah. No, I think we did we did for we did forecast like what the budget would be to do this work, but I don't and you suggested in terms of financially like what that the impact is on this on the the fund itself or the individuals are not quite sure. I see what you mean. I was I was thinking in terms of the organization, you know, how much of a threat is that it took potentially to our position and how much how many people have potentially problems. That's so I see. Okay. Yeah. Yeah, so I wouldn't I I mean the cases as it stood at the beginning was somewhere in the region of about 11 to 12,000 cases that required processing. However, when we first started but part of that initial analysis actually was a hot but about 20% of those weren't it was actually where there's a duplicate on the record. So what it needed it is it needed that data cleanse. So the work had already been done. But so I would say off the top of my head if I'm just trying to work out the numbers left. It's somewhere in about 4,000 cases that are left how many members that affects is probably I think I'd have to take away and look because it could be that there's multiple multiple cases open on an individual's record because of the way that these legacy cases are built up. They look like they were deferred but actually they could have been a transfer or the other way around and there's lots of permutation. So I could probably get that information but just don't have it to hand now. Could I can I'm really concerned if I can count you and I'm really concerned about the scale of work that's involved and do we have the resources available to you? Yeah. Yeah to get that done. Yes, we do. So we could we completely set up a separate what we call legacy team that stand completely aside from the day-to-day operations and that was made up of about eight people. So it had its own resources. We did all that at the very outset of that. I did a kind of analysis of forecasting what we would need at the rate in which we think we could clear those down how many cases would be processed a day so that so we did that early on so we completely ring fenced this piece of work. The implication of that is that you as a result would have a date by which we would have caught up. Yes, when would that be roughly? Well, that's what I said. I think it's probably around October November. I'd expect us to be clear of what we call legacy and then everything else would be back into business as usual. So you'd always have a working it would go from legacy to work in progress and how out what we need to make sure we do is determine. Well, how big does what does work in progress mean is that means that no case is older than a month two months 20 days. I think that's the next part. We need to work out what we're currently doing at the minute. Anyways, this was also the future reference. What was the root cause of this arising? Yeah, I mean, I get to summarize some of those when we found the beginning I would say this was a combination of as a service. We probably stretched ourselves too far when we became a multi administration system provider at the time. I don't know that it was particularly well thought out in terms of the resources of what was required when taking on those additional administrations. So we maybe weren't in the right place to to do that at the time. I think there's also a mixture of probably poor practice in terms of the process. It wasn't consistently done across all funds at the time. So there was just a multitude of things there. I think every year you get an influx of employer information whereby you class them as an undecided lever and that means not quite the you can see that they've left but you've not really been given all the information that would allow you to process the case. What was probably not happening is we weren't going back to the employer about that time to get that information to put them into business as usual. So we've addressed that problem now that we make sure that we don't let cases just sit there in an unattended state. So we've made sure that all those kind of business practice have been tied together. Do we think there are additional cases coming in over time or do we think that you're just resolving what's already there? We are resolving it. Well, there's always casework rolling in but we are resolving that ring fence piece of work. That's what we class as legacy. Everything else is of business as usual operational and then that's the main bit is now to make sure that we don't let a backlog build up again that puts us back into this in three four five years time and then they are the pieces of work that we're doing to make sure that we've got the right resilience within the team to cope with those demands. Thank you. I think just looking historically where we've come from these numbers have not been good for many a year and I think the critical point to start to remedy that is decision. We talked probably three to four years ago to not providing services to other providers to concentrate on our knitting and as Tom said, you know, there are 300 employers so you have different relationships and data problems and changes with all those different organizations. So it does become complex. So the decision to go back to square one and say this is the processing team and we do need a residual team to deal with this and we started with I don't know eight or ten thousand transactions the majority of these were not transactions that needed to you know, current employer or pension being brought into payment the majority of these were deferred members who had left and we didn't know what they wanted to happen to their funds and there are various regulations that say what must happen within a certain period of time. So it was dealing with this I think Tom it might be useful. There's some percentages on page 75 if perhaps as an outcome of this meeting you could send an email to members of the committee just emphasize just saying what those represents into in terms of members or transactions involving members if that's an easier. Yeah, so I just come in there. Sorry. No, I think that I think there was a little do we did chat like about me putting in a slightly more detailed paper for board this time round. Yeah, and that way I'll go I'll go into more of the metrics and kind of what the team has done and I can give that kind of milestone as well that will indicate where we thought we'd be in how far through it. So that will give you a lot more of the information of the questions you're asking I've been I think it's very important to give some visibility or greater visibility to this this side of work with the committee Neil. Yeah, just in relation to a couple of points that council armor made and I'm not going to go over old history at all here, but I do think that the the improvements can be tracked from when the administration service was brought to sovereign control for previously was provided as a partnership a for for a number of different administering authorities. We now have sold sovereign control and integrated team. I think that's absolutely key and the second question was what you mentioned about the team. So yes, we have a ring fence team some of them are fixed at fixed-term contracts, but we do believe that they will that has given us extra resilience in the in the overall service delivery team. There have been examples where where team have moved from legacy to support other other parts of the business as usual and also we have a huge pipeline of events such as McLeod and the role of a dashboard where we believe that it's good to have that internal Resilience. So we're future fit to support that in due course. Thank you. So Tim, I think you want to make a comment here. You're still here. Yes. I I'm not supposed to be still here, but I am. And I was just wanted to say I mean you and you and Neil have covered all the history of which I'm aware of. I just wanted to reassure the committee and David in particular that this is something these legacy issues as things that the border on all the time. And I think what we need to do is to make sure that following our follow-up next board meeting. We do give a more detailed report on what these legacy issues are that are still outstanding. I'm very well aware that a lot of them was resolved very quickly, but the ones that remain tend to be the tougher ones who knows how long it will take to resolve. But I just thought that might be helpful to the committee to know that the board is right on this. Thank you. Okay. Members, so we're asked to note this report. Is that agree? Thank you. So moving on to item 10, please. It's the investment manager performance and asset liability updates and will bring Lloyd into this for the for this item. Thank you. Yes. Thank you chair. So we've already discussed the funding ratio and as I said though, that's an asset value growth this time. So the fund is worth about 5.8 billion. So up quite nicely over the last couple of years. What's been going on in the market? It's been driven by equities as you know, we have an allocation of nearly 60% to equities. Equities have been very strong, particularly Japan and the U.S. So that's driven out absolute growth been some weakness in government bond markets. But as you know, again, we have a very small allocation to that area. So in terms of fund returns, the fund was up over 5% in absolute terms as you know, we target that on an annual basis 5% so it's been a good good quarter and good start to the year on a relative basis. The fund is behind benchmark we discussed at the last quarter the impact that comparing private markets to a listed equity benchmark was having on that performance. And so the majority of that under performance the benchmark is driven by the private markets section of the portfolio, but there is also under performance from the active management funds at border to coast offset by some positive performance from Newton. This quarter we do have a our equity class review later is on equities. And so I think if we go to that section later independent advisor investment consultant and border to coast can all be commenting about the equity performance at that stage in terms of transactions. Just really one I'd highlight is that having agreed to invest in the border to coast global real estate fund last year. There's obviously a lag before the investment started and in this quarter we have now made our first investment into that firm. So we've had the first call on global real estate with that. I'll have to take any questions. Thank you. Members, I don't see any hands up but we do have the session in the part 2 as Lloyd indicated. So I think I think that's a good. It's an important part of our portfolio and we got the chance to do a bit of a drains up when we get to that item. So if there are no further comments, we're asking the committee to note the main findings of the report in relation to fund valuation funding level performance returns and asset allocation. Is that agreed? Thank you. So moving on to company engagement and voting again Lloyd. This is page 89 of the printed pack 90 page 95 electronically Lloyd. Yes, I'm actually going to hand over to Mel to introduce this one. Thank you. So this quarter's engagement and voting report, we've got the standard links. We have the link to the LAP FF quarterly statement quarterly engagement statement. We have the link to the Robeco statement on behalf of the active engagement report on behalf of border to coast. And we also this time included the climate action pledge and active ownership report for legal in general. In annex number one. We have the Surrey voting report. So I'd like to bring a couple of things to your attention. Number one is page 97 electronically the graph the picture of how the LAP FF at the active their active owners, excuse me, their active engagement in the different SDGs the majority of this quarter have been on number eight number 17 and number 16. Now eight is decent work in economic growth 16 is peace justice and strong institutions in 17 is working in partnership toward these goals. So that's the majority of that is made up of an initiative that's been spearheaded by Rathbones to attack and deal with modern slavery for the footsie 350 companies as well as now it's extended into the AIM markets. I'd also like to highlight bring to your attention annex number four, which is the ESG report from our first ESG report from the border to coast emerging markets actively managed portfolio. Now if you recall when you made the decision to move from the index driven emerging markets fund into the actively managed emerging markets fund from border to coast one of those one of your goals was to reduce the carbon imprint the carbon footprint and I am pleased to report that just that has happened the carbon financed emissions per million dollars are down over 70% and the weighted average carbon intensity the wacky is down to 50% or just half. So with that I'll open it up to questions. And there's any questions or comments you wish to make. Thanks George. Yeah. No, it's not a question it say I'm lost which agenda item is this again number 11 in that case. No. Okay, no, no comments questions. So can I move to the recommendations and those are set out on page page 95, I think electronically concern referring the ESG factors which are fundamental to the funds approach consistent with the RI policy. Continue to enhance the funds own RI approach and sustainable development goals alignment acknowledging the outcomes achieved through to the course rendered March 2024 by the LAP FF and Rebecca and noting the voting by the fund in the quarter ended 31st of March 2024. So all those agreed agree. Thank you. So can we move on then to item 12 investment beliefs investment strategy fiduciary duty and investment steps and we have quite a short paper here talking about some meetings and task groups that we're looking to in the next several months. I'll ask Neil to introduce this item. Yeah, thank you chair. It was discussed at the last meeting about having a series of sessions the sort of training and thought sessions over the summer with a mind to thinking about the overall funds investment beliefs and here is a sort of a sample agenda that we're proposing with three different sessions the first one to cover off regulations and fiduciary duty in the decision making and then to move into another session thinking about some of the new or emerging investment themes, you know, leveling up impact local investing and then a final session to just combine those two and think about whether the committee does feel that the investment beliefs are as they are now appropriate or whether they need changing happy to take any questions. Okay, thank you. Yes, the this is a thought for when you do the sessions in future. I'm particularly interested in how we wait one concern or priority or whatever you want to call it against another one and on what basis. It's a multiple obviously because one against two two against three and one against three etcetera, but that can be part of what you do. George. Yes. So I think we're asked to comment on two things. Well, just on video saved two points on the agenda on the proposed agendas rather for the sessions. Just I would suggest that the first session one you've got item B is so pension from the view and sustainable development goals. I'd ask if it would be possible to change that to so pension fund and ESG because of course the same would run goals are a key part of how we foundation of how we assess ESG, but they aren't necessarily the only metric very metrics we use and of course and I think it would be helpful if the discussion had the option to be focused at slightly broader than just purely view and sustainable development goals. So that's to say a comment on the proposed agenda. Yeah, the other question I want to ask is what's the what mechanism do we envisage for how big the subcommittee will be and how and who will be on it? Let me answer the second one. I very much hope the entire committee will be on it. We did have the as remember when we did the RI and the net zero we had all or very nearly all of us invited. So I want to include the whole committee in that area and I've had a similar comment from Steve Williams as he left the meeting earlier sign off, but that is our that's our aim to get the whole committee in a subcommittee session working together on that first item Lloyd. Yes, I mean the actual item that was going to be talked about in that section was just a basically refresher of where the fund had come with the SDGs as you know, there was that significant mapping work that was done about two or three years ago and it was going to be a refresher of what that mapping was and whether and whether we should actually be thinking about doing another wave as that's developed and just to as you know in the RI policy it does refer to the UN SDGs as sort of underpinning but yes that can be that can be broader and just while I have got the mic I should add that we're expecting all of these items to be taken all of you know, the fiduciary duty and all the fund to be taken by external speakers. So we've we will be doing the sort of a logistical exercise to try and get all of your diaries and the external speakers together for those sessions. Yes, just as one fact, yeah, I envisage that was sort of what you had in mind for that session. But yeah, I just think would be an official if it were focused on what the theme was the SDGs because as you say the SDGs are very much underpinning of our approach if we want to talk about more than them as it sounds like you're suggesting want to do then maybe just giving it a name which reflects that but yeah, yeah and it's certainly so and we've got the dates here haven't we for the or the envisaged time periods in which we're expecting these sessions to take place. So we should be finishing up by October. Is that correct? Yes, I mean session two is on the day of the committee meeting again, hoping to be better for diaries and then the October one is it's a matter of trying to fit in the July August one. Thank you. Thank you any further questions? This is obviously the enabling and setting out of the program. So there are three recommendations on page 127 electronically establishing the subcommittee on how the committee's fiduciary duty in law relates the objective of the fund and reaffirm investment beliefs except the proposed agenda for the subcommittee sessions taking on board the comments George has made and agree any proposed changes the investment beliefs by the subcommittee be brought back to the committee for consideration. So are those agreed? Thank you. So could we move on to item 13, please? And this is the Competition of Markets Authority investment consultant strategic objectives Lloyd. I think you're taking this it's page 1 2 5 or 1 3 1 on the electronic. Papers. Yes. Thank you Jack. You'll recall that we do the CMA review of the investment consultant and that comes to each December meeting and when we did that review last time in last December, there were a number of criteria that have been set in 2021 and objectives for the investment consultant that weren't particularly relevant to actually how we're working together as you know, we have a sort of an RI consultant through Minerva who have helped us with the voting and so and so much and so forth and also the team here myself and Mel have been doing a lot for example, one of the areas was the stewardship code, which we've done ourselves rather than going out to a consultant. So the net result of that discussion was to have a review of those criterion objectives following that review you'll see in the annex for of the criteria have been deleted a couple of the objectives have been deleted and some have been merged and rewritten. So we've reviewed this we've obviously been in discussion with Mercer as well. And I think the resulting criteria are much more reflective of the work that we're asking Mercer to do happy to take any questions. Could I just ask Steve if you want to make any comments? Thank you. Check. We're very happy with the new objectives should lead to a sort of fairer assessment and it was a good example of like a good dialogue that we've had with officers. Thank you. So if I can move to the recommendations recommended the pension fund committee approves the updated strategic objectives for the Investment Consultant of the fund in line with the CMA requirements. Is that agreed? Thank you. So we're moving on now to item 14 LGPS update which is a background paper nevertheless an important elements of what's going on in our universe. So that's on page 133 139 electronic. Thank you. And this is Neil and Sandy. Thank you chair. So so this is a as chair as you said the regular paper we have and all all of the technical updates in the scheme since since we last met and if you have any questions on any of those technical assets, I'll ask you to address them to Sandy who might have a half a chance to know the answer rather rather than me. I would just hover over the first height of the highlights which is the which is the letter from the outgoing minister which is including in full in the annex one. This is written to chief executives and section 151 officers of all the administrative authorities pension fund administrative authorities. We are intending to to respond to this letter the outline of the challenge that the minister set funds was to demonstrate their their the pace of pooling and how they have met that objective and also to consider how and if further efficiencies could be made with further consolidation and in this in the lgps space as I've said on numerous occasions the sorry team sorry pension fund. I think it's exceptionally well placed to answer these questions in our in our efforts to pull we are we are well well placed and in in our collective working whether that be through sharing knowledge with our partners in both the coast or in the wider lgps ecosystem again. We're very well placed to face that challenge. We will perhaps be touching on some of the issues arising from this letter in the item in the last item on this agenda for regarding the 2030 strategy from both the coast in which the 11 partner funds and both the coast have anticipated a lot of this this direction of travel and I've firmly tried to take control of our own destiny on the agenda, but I'm happy to take any questions. I was I said any other technical questions Sandy our technical manager is is ready to take those to Neil. Can I just ask when the the letter was addressed to chief executive officers and section 1 5 1 officers rather than of the administering authorities rather than the committees. So we're not going to be signing that but nevertheless, I've certainly seen a draft which I'm actually very happy with. So when can that be shared with the with the committee because I think it's important people say it. I'm very happy to share chair on the the we were going to send it to the the new minister whenever that is known and I'll be shared prior to that. Right. Okay. Hope members are happy with that. Yeah, George. Yes, just a question are page 142 paragraph 20 the cost control valuation. I must confess to you and the and the core cost cap here. I confess being somewhat ignorant as to what the core cost cap is perhaps somebody could expand on on what they actually mean though in terms of us falling outside the corridor. I think this dates back to a former deputy prime minister of the in the Blair government. So please tell us about it. I think we're sorry, excuse me. It is something that the scheme advisory board then have to then look at further. Gosh, yeah, actually, what is the core cost cap though? I'll look into it and I'll come back to give you an update on that. What actually is the economic cost cap cost so we can so basically there are two mechanisms by which by which the the value of the benefits and the efficiency of the schema measured so that there is a the Treasury said set a cap for all all of public service schemes and then the scheme advisory board have a scheme specific way in which they look at it. So I look at it from an lgps point of view. Whereas the the Treasury set an overall so for the unfunded schemes as well and the two sort of interplay. I think if it breaches to 2% then something then then there needs to be a consideration of a change of benefits. And what the scheme advisory board have said is that that situation isn't breached. So it may have breached the both it needs to breach both of the the mechanisms. I'm not making a devilishly complicated thing sound very very much more easy. I appreciate we can provide some feedback but it's if the Treasury cost cap is breached and also the scheme advisory cost cap is breached both then there may be a need to be a change of benefits on this occasion. I believe it's a scheme advisory cost cap that's been breached but not the Treasury or the other way around but either way there is not a recommendation for any action. Yeah, perhaps just an it was John Prescott who introduced it and it was a result of there was a major change in the scheme benefits moving to career average and there were a lot of discussions with the unions. So it was a way of sort of balancing what the impact of this might be and not holding too many hostages for fortune in the future. I must say that's the limit of my understanding that David well, yes to Neil the implication of what you just said is that what we would need to know is how near are we to the second category getting breached? You don't have to answer immediately. But bear in mind we're talking about data assessment was carried out in 2020 as well. So it's it's very it's backward-looking also, so I think ultimately and and the for the Duncan will know the unions are very closely involved in this to make sure that we're monitoring monitoring the situation and as I say the the recommendation from from you know, from the D like is that no, we're not we don't we're not in a position where we need to consider benefits and we won't we won't go through this process again until it's a four year. It's a four year cycle rather than the three years. So so there's nothing really aligned to our own our own tri-annual basis that we will but will act retrospectively on anything any data that's and any assessments made within that the government's H on HMT cycle. So we have to follow that but as far as you know, we're not close to the edge. We haven't probably I mean all I can say is we haven't breached what breached the cost cap and yeah, but we were in the region of sort of the cop where the cost cap is but we haven't we haven't breached it. So it's sort of irrelevant really if we don't breach it. We might we might more breach next time, but who knows what I was getting at is surely we ought to be making sure we don't reach both simultaneously. We haven't really got an awful lot of we don't really have any control over anyway. Yeah, it's a relevant question. So it's a it's a an overall LGPS design issue and the benefits of it. Colette, can you help us here? That is exactly what I was going to say that we need to be thinking about this as the LGPS as a scheme with the 88 different administering authorities throughout England and Wales. So the assessment is made against all the data. We're not specifically looking at Surrey pension fund and if if if the cost cap is breached then we'd have to go through a process of deciding on how the benefit structures itself within the LGPS will be amended and then that goes through the normal processes of consultation draft regulations before before they come into effect. So this isn't something that ever would happen overnight. It will be a long drawn-out process should ever get to that. And to reinforce it's the scheme as a whole for all the 88 funds not nothing specific. Exactly. It's the LGPS scheme itself. Yes, I guess I would say don't worry about it is my conclusion. Thank you. Thank you any any further comments or questions? Perhaps I might have one. There's a comment here about the pensions regulator. We know the pensions regulator has a new national code drawing in the private schemes as well as the public sector schemes. So an element of that was rearranging the deck chairs. So they they're all in line. I know between the the two sorts of funds, but I mean there have been some changes. Are we or when will we do a an analysis because we certainly have done them in the past to say of the hundred and thirty odd regulations were in compliance on hundred and twenty-five of them and these are what we're doing to get in line on the other one. So where will we need to do such an exercise Neil? Yeah, the answer is yes, and it's we're in the process of speaking to within the the accountant governance team and speaking to our consultant community as to how best to achieve that you're right what we have done in the past on when when we had our own specific public sector pensions code is we would take a a compliance report to the board. We were expecting to do the same thing on the new general code of practice and we're expecting that to go to the November board. I think that's how that's how schedule it works. Thank you. So no more hands the recommendation as we note the contents of this report is that agreed? Thank you. Okay, so moving on to the responsible investment updates. That's item 15 starts on page 143 149 electronically and we do have four annexes in this side is this will be quite a substantive item for our agenda. So we've got a number of speakers. I think Lloyd you're due to introduce it. We've got David crumb the virtual I think attending to talk about the RI policy. We have Steve Turner speaking about the next zero investable universe and also the exclusion exercise which the committee asked us to do and the there's a a analysis at the very end. I think it's 215 electronically of our top 25 fossil fuels holdings. So Lloyd over to you. Thank you chair. Yes, as you said there. So there are four sections to this paper and they all come out from previous agreed actions from the committee. So you'll recall that when the RI policy was agreed in June last year that there was going to be review on an annual basis for best practice for that policy at the same meeting the net zero date of 2050 or sooner was agreed. And again, it was agreed that there would be an annual review of the investable universe behind different dates to see if the investment landscape had changed going back to December last year. We reported on a request that said what's our exposure to the 25 fossil fuel companies in response to that. There was a request that we look at an exclusion exercise for those companies. And so that's the third section and then there was a fourth request that although we presented the exposure to those companies before on some of the funds there was a request to have the pound note exposure to all the all the elements all the mandates within the portfolio. So that's the wide-ranging area of this whole report. I would suggest that we sort of take section by section so that we can sort of narrow down the areas that we're talking about there and the first one would be the RI policy review. You will recall all of the subcommittee subcommittee meetings and all of the sessions that took place in developing that policy and the reviews around it and consultations and so on and so forth. So you probably wouldn't be surprised that it does still stack up well against best practice. And so there have been only limited changes some of the wording because the committee is now set a net zero date and we have brought in the new voting policy. So there has been some elements that have been changed but generally that review stacks up well and as the chair just mentioned David crumb from Minerva is online who carried out the review and he and I are available for questions. Thank you Lloyd David. Welcome. There any in initial points you want to draw to our attention terms of changes on banks chairs. Thanks, dear. Good afternoon, everyone. No, I think Lloyd's kind of covered this very well. The policy stacks up it holds up very well this year what we did in undertaking the review. We looked at it from two perspectives. We considered it from the internal Minerva perspective. So we got our team involved all of our different stewardship experts to look at it and make some comments and then we also looked at it from effectively an external benchmarking perspective. So what we did was we picked the PRI's guide that they have issued for asset owners to develop their own responsible investment policy. So the PRI principles for responsible investment. They were set up. I think they started off actually as a UN body, but they're now a commercial entity, but they work with asset owners to develop and share best practice around responsible investment and they have different principles that signatories agreed to so the the conclusion from the work that we've done the policy stacks up very well. They were relatively minor changes and updates to make to it as Lloyd has said and then there were a few bits and pieces that came out of the PRI gap analysis that I think Lloyd will touch on or will be brought to the committee at a later date. But other than that the RI policy is in good shape and I'm happy to take any questions. Members. George. Thank you. So no prizes for guessing but I'm particularly interested in in the analysis being done on the potential impact of fossil fuel exclusion and first of all I want to thank all involved for the analysis. I think as identified in advance this meeting when looking at the overall impact of the change to potential returns. I did think it was someone helpful that we're only looking to relatively short timescale for that analysis, but I think if I recall the answer from Lloyd was that actually the period that's been looked at recently is very similar to the several previous years. So in effect, it's still a reliable guide which is so thank you for that clarification in advance. And George I'd like to discuss the you know, the the paper from Minerva at this stage. We've got essentially three papers here. So I'd like to really focus on the paper first. Sorry. Yeah. Apologies are misunderstood. Yeah. So no comments or questions at this stage on that particular element. So let's move on then. Thank you. Yes, the the next section as I summarized briefly was to look at the investable universe and I'll hand over to Mercer to comment on that. Think just for members benefit. I think we're looking at Annex 2 which is 195 electronically. Thank you. Thanks, Lloyd. So the committee will remember last year that we did a feasibility analysis to sort of look at different net zero dates and the theoretical implications that would have from an equity portfolio perspective in terms of the universe of stocks that are aligned to certain dates. So we looked at 2030, 2040 and 2050. The summary view of the analysis last year was that the number of companies that were aligning to 2030 and 2040 relative to 2050 were just too small in order to be able to construct a sensibly diversified investment portfolio. So it's been agreed that we do at least on an annual basis an update of the number of companies and this is what we're presenting today. So there's two key slides in this presentation. In my version of the pack, the first one is on 192 page 4 of our report. Yeah, so we've actually done two sets of analysis this year. One is a like-for-like so a comparison of this year versus last year, which I'll touch on first and then we've also got an update looking at the criteria that redeveloped in a slightly more stringent way. So the key summary is that we don't believe that the number that the universe has... Sorry Steve, might just interrupt. So it's 198 I'm looking at, is that headed up investment opportunity set? Yeah, yeah, yeah. Yeah, so there's a busy chart here, but there's a lot of analysis behind it. So just to summarize, overall, we don't think the universe of companies with net zero dates before 2050 has sufficiently expanded to justify targeting an earlier date from a diversification perspective. Just to walk you through the numbers, total number of companies in the MSCI world ACRI index as at December last year, 2,886. Pleasingly, the number of companies that have got a net zero target date has actually increased by quite a lot, 360 to just over 1,100. There's been an increase in companies targeting 2,040. That's now at 385 and there's been an increase in the number of companies targeting 2,030 up from 70 to 196. However, the key stats are the 196 companies still only represent about 7% of the total number of companies out there. So another way of looking at that is that's a 93% reduction in your opportunity set and then in market cap terms, so that the value that those companies represent of the universe, it's only about 13%, so a reduction of over 80%. So broadly speaking, the numbers aren't massively different compared to last time. So we are still of the view that although progress has been made, especially in terms of the number of companies targeting 2,050, it is not sufficient to be able to build a sensible diversified portfolio for the earlier dates. Because those 196 companies, it's a very theoretical portfolio. The only criteria that we've used to come up with that number is what the net zero date is. Of course, there's going to be many other reasons why you wouldn't want to or why an investment manager would choose not to invest in those companies. So it's really about the overall opportunity set. I think looking ahead, thinking about what level of companies in terms of number and market cap, we would need to get to in order to perhaps get to a position where we can bring forward your dates. It's like to be where the number of companies are in today's terms for 2,050. That's not a hard and fast rule. It's just a kind of an indication of current thinking. But that's what the analysis is suggesting. Steve, sorry, I missed that. Can you just repeat that conclusion or working assumption? Yeah, so we're doing this analysis. I think the natural question is to ask at what point, what does the number of companies need to look like? What does the market cap of available companies need to look like until we get to a point where we can perhaps have a more meaningful discussion about bringing forward your net zero date. And there's no hard and fast rule. There's no one right answer here. But our current thought is that the number of companies would need to get to around what they are for the 2,050 date. I mean, in practice, it's going to be looked at on kind of annual basis. We're hoping to get incremental improvements in the number of companies with earlier net target dates. But so I think it's a case of keeping a regular review on it. So just to clarify what you just said. So you said the number of companies would need to be equivalent to around the number that are currently got a 2,050 date. So presumably talking about around 1100 give or take that that's number companies that you need to feel confident about it being a sufficiently big enough investment universe to yeah, correct. Yeah. Just wanted to tease that out. Yeah, I mean that that's only very indicative, but I think it's useful to have that number in mind as a kind of reference point for the future. And then just moving through the slides the page after the one we've just discussed it shows you the top 10 holdings of the companies that would be in those portfolios again, like it's purely theoretical. So we've seen that the the concentration level of the top 10 actually come down. That's a positive but we have seen some a fair bit of movement in the top 10 companies and interestingly a number of like banks have now come in to that universe and that just raised kind of other issues. So again, I just remind everyone this list is only based on one single issue and that's what the company's net zero date is of course. You might have some concerns about some of the activities about those companies in terms of their lending. So for example, you know, are they lending to, you know? Have you know heavy so fossil fuel companies so we accept that this analysis isn't perfect but you know is providing us a good basis on which to help provide you with more information than otherwise would be the case. Thank you. Apologies, David. Thank you. Yeah, so I think I understand what you're doing and I'm not criticizing it per se but one of the things that bothers me in a number of ways is that there are companies whose main activity is dependent on supplies of could be raw materials could be power and it could be power in several forms but you know particularly do we consider that in terms of there's no point in saying we're not going to want to influence what they're doing but actually they won't be able to do anything anyway because we're trying to get these other people to stop doing what they're doing. So companies in sort of industries as a whole interact with one another. The analysis that we presented is very factual. So there's no kind of subjective overlay applied to it. It's it's based on the actual numbers of companies in the universe and the number of companies that have stated net-zero dates. So as individual companies as individual companies as opposed to the inter interdependence between sectors and sectors. It's just based on what individual companies have stated that they're going to target. So that's a good segue actually into the additional layer of analysis that we've done this year. So the analysis that we did last year and what I've just discussed we kind of take what companies say at face value in terms of you know, if a company has said it's going to target 2040. We assume that that that they're going to achieve it. MSCI who are the data provider that we use for analysis. They've actually introduced a kind of a credibility factor now, so that's trying to sort of go above and beyond a face value approach and look at is there any evidence to try and support the the actual sort of credibility of that company's net-zero date because of course they could easily state a target date but whether or not they get there is a another issue. So the we've got another chart saying investment opportunity set subheading updated more stringent methodology and this gives you an idea of what we see. We see a reduction in the number of companies with this at various net-zero dates, which I think is perhaps not surprising because there's an additional a bigger hurdle here really in order to be confident about those dates and we'll get with this additional sort of lens on it. You get into like, you know, very very small number of companies that have this let's call it additional credibility with their net-zero target. So for 2030, there's just 33 companies with 2040. It's like 76 with 2050. It's more meaningful like 661. Thank you. And this is primarily for scope 3 this is this is for scope one and two so there's still not sufficient data for some firm scope 3 but as and when that comes in we'd look to expand the analysis. Kelvin thank you very interesting analysis you've done and it shows that the number of companies that have a even a 2050 date. That's very far. But it's relatively small. So is that because companies are just they're unable to meet a 2050 day or is it because they it's too much effort or is there not enough investor pressure? What do you think can change the situation? It's a complex issue. I think it seems that all of the above that you just mentioned clearly there's still some companies that being resistant to putting plans in place. I wouldn't underestimate just the amount of work and complexity that companies need to do to put this in place as well. And I guess from an asset owner perspective investment manager perspective. You can always do more. I mean just to add to that. I mean, I think it's partly what we shouldn't discount here is the fact that there's a very big difference between setting a target setting a commitment and actually having already done the work to be able to meet that commitment and to have all the plans in place need to hit that commitment. And I think it doesn't surprise me at all that the number of companies which are on track to hit their target date at the moment as far as you can verify is significantly smaller than the number which have set targets because the nature of it is if you set a target, you know, it could easily take you one, two, three years maybe to actually build a robust plan for how you're going to get there. So I don't think we should necessarily be surprised about that. I think the point to watch with it is the trend is in what are the number of companies setting these targets and other companies to set targets are they moving forward towards developing more detailed plans for achieving them or are they moving backwards? And I mean on that point, I appreciate the more stringent methodology you're using here on page 201 is new. So it's the first year we've got this information available for so I appreciate we don't have information to understand it at a more grain level. But your impression is it, you know, are we seeing a decrease in the number of companies which have got robust plans for implementing their targets or are we seeing companies moving more companies moving towards more detailed plans? Yeah, so we would use this analysis as the baseline for future analysis. I mean, we definitely agree with the looking at the future trend. We did actually look at how analysis for more stringent criteria would have looked in previous years and it was really difficult to explain why the numbers were changing. We think it's a lot to do with the methodology of the analysis that MSCI have applied. So we were of the view of don't make try not to make too many insights about this new analysis today, but use what were presented as this at the baseline for future and up with you. So just first of all, are you finished going through this presentation on this point? Because if not, I'll wait until the end. Yeah for this particular section for this particular report that's finished. Thank you. Yeah, I'm just going to pick on the list of the top 10 global companies with verified 2030 net-zero targets. It's a very different list to the earlier list. So does this point to factors such as governance in these companies and the quality of their reporting as apart from anything else? Yeah, that could well be an issue. I think it's a way of trying to distinguish companies that might be doing some greenwashing. That's what I'll regard as governance issues. Yeah, I mean at face value, you could say it's relatively straightforward for a company to come out to say it's going to have an ambition to have a net-zero date. But then if you look at whether or not it's had a it's been verified under something your SBTI initiative. That's certainly a different question. I think you know, what we've got here is an established framework for how we can help you assess the investable universe and start to track it and importantly, you know, when we see a meaningful change, you'll be able to change it at an appropriate point in the future. Yeah, and I think you can allow a degree of wishful thinking when companies are talking about 2050 because it's got time enough to actually seriously change direction when they're talking about a 2030 target, you know, that's practically next week in company governance terms. So I'm, you know, concerned as I say that, you know, what we what some of what we see with some of the claims being made and start going. Okay, we need to be really careful about what we're doing from an investment decisions point of view with these people. Thank you George. Yeah, just first of all just respond forever. I take the opposite view a 2050 target date because it's so far in the future. It's very easy to say. Oh, yes. We'll hit it if company if companies particularly at the moment are now saying we're going to go for 2030 that's probably indicator that they've given it some for because if you're going back to the say a few years ago when say, you know companies like BP were talking about ambitious net zero dates and they have been completely backtracked on from since then. So I think I think if anything any company which is setting a date now is coming off to that point where it's all trendy to just announce dates without giving much thought as to what went into them. So I'd have thought the company which coming out day and saying 2030 2040 has probably put more thought into it. Wanda says yes. Oh by some point, but 2050 will get round to it, but I digress with the report itself. I think there are I think two things that stood out to me the trend I think looking at the first and I'll just be the year-in-the-year analysis using just the targets. All of the projected net zero years it is remarkable the percentage increase in the number of companies in each category. I think for 2030 target dates. That's something like a 55% increase in companies for 2030 target dates if we're looking at 2040 target dates. It's something like a 70% increase and clearly the 2050 target is again. That's gone up by about again about a fifth 25% in the space of the year and I think what that tells us is that although the investment universe isn't big enough today for 2040 target date which are for instance, which I don't think anybody suggested it was it does see if that trend continues it would seem to suggest that within a few years time, you know, maybe just three or four years from now it would be in a position the investment universe could look significantly different from earlier target date than 2050 which of course was the argument that was made when we're discussing what target date we wanted to set as a pension fund was a point of it's not about what where the market is now. It's about where market is likely to be getting to over the next few years and I think that trend is worth bearing mind it to me indicates that there should be grounds after a couple more years worth of data to really seriously reevaluate our net zero target date because based on these current trends, we should have an investable universe big enough for an earlier target date within two or three years time. But again, let's wait and see what the data says before we get to that point. The second question I want the question one I've had had two questions. I wanted to raise around it. So I think the number of companies setting setting earlier targets such as 2040 2030 is definitely welcome. And again, obviously whether they'll actually hit that or not whether they've got plans in place it but not as discussed earlier is a separate question and needs to be monitored going forwards. I was just wondering whilst we currently have a 2050 date for the fund as a whole. Is there anything we could is there any mechanism by which we could try to incentivize or reward those companies which are sort of moving ahead and setting target dates sooner? I mean not in the I appreciate the various obviously that if you look at the 2030 target date set on page 198 quite clearly if you were to invest in that section of market aside from how small is you'd be heavily overexposed to certain classes and massively underexposed to other ones which you want to avoid. So I'm not suggesting that we should say just go all in on 2030 or anything like that. But is there any sort of waiting we could potentially of any sort of waiting which could potentially be applied to investments to sort of favor all else being equal companies which have set earlier targets for later targets because I think the trend here is a positive one and if there's something we can do as an investor to try to encourage a welcome trend I'd be interested. So that's one question, but I've got an entirely separate question if you want to answer that one first. In terms of the incentivization I'd need to go away and speak to some colleagues in relation to equities. There are examples I understand in context of bonds whereby you could incentivize a particular company to take certain actions and then that leads to a reduction in the interest rate that they pay on the level of debt, but I think that's a very like very small nascent area. Might be worth a joke from board of the case to commenting. Yeah, certainly on the fixed income side global sustainance securities. That's a very much a growth area. So companies are essentially issuing debt and linked to that debt. They have particular activities which are focused on this area sovereigns as well. So that's something that we as an organization are going to focus on next year in terms of building a well as funding levels improve. We think there's going to be some more fixed income allocations. We'd like to see our partner funds look at that through global sustainable securities and have the same attributes of a global fixed income portfolio, but also think about that transition side of it as well. Okay, thank you. I mean, definitely be interested to learn more about that in future once things moved on a bit, but okay, that's really interesting. Then last question on this bit. Obviously in here you make reference to ITR. So implied temperature rise, but obviously the metrics we've got are looking purely at net zero years and obviously I think the net zero years are helpful, but I was wondering whether it might be possible in the next year's version of support and in future years to also have some analysis which looks at ITRs because I think the implied temperature rise is probably more important and more significant than necessarily when a target date is because aside from anything else, if I'm emitting a thousand tons of carbon a year up until 2050 and then in 2050, I drop it down to zero suddenly. Well, I've emitted many times more carbon over the next up until 2050 than if I gradually phase down. So I think to a certain extent the implied temperature rise from activities is probably more significant than the target date. So I don't know if it might be possible to include some analysis or metrics on that front in future iterations of this report, please. Yeah, I mean there is data on implied temperature rise and we do have it. So I'm sure we can put something together with that additional lens. Sounds to me pretty tricky because it depends on the slope that companies are going down. It is pretty tricky, but there are metrics out there and the metrics are referenced here. We just don't have them displayed to us and obviously any metric is always imperfect. It's always about the best you can do, but just I'm not suggesting we should switch to looking at that rather than anything else, but I think having it in addition would be helpful. Okay, we'll take that point on board. Thank you, George. So shall we move on then to the third item there on the top the fossil fuel side of things. So I think over to you Steve again, unless you want to say anything Lloyd by introduction just a couple of lines obviously committee members have seen the process. So that was circulated that we've gone down and some extra emails that that George is referencing earlier. So we've discussed about that and that covered some of the caveats which I've tried to bring out in the paper as well that the type of data that we're dealing with and also that this is a theoretical exercise that particularly applies to passive assets. It may not have much relevance necessarily to active assets, but I'll hand over to Steve. Thanks, Lloyd. Yeah, so I'll take you through those key points from this report. I think it's important just to be clear the list of companies that we obtained analysis on that was pre-agreed with the committee. So we haven't had any kind of subjective overlay on that. So want to make sure that everyone's happy with that and that list is clearly provided. So Lloyd we suggested that Lloyd request help in this analysis from border to coast and legal in general in order to quantify the impact on some investment and carbon metrics. So thankful for border to coast and Algim's input on this. We thought that was like useful from an overall use of broadness of inputs to this review as opposed to everything coming from from from MRSA. But to take you through this at the key highlights in terms of there's a page page for in our report summary financial metrics. We looked at the impact of the 25 companies excluding them from the relevant benchmarks for the equity funds that you invest in that can be breaking down into UK equities global and emerging markets. So they're currently managed by border the coast on your behalf, but we've simply looked at the impact at the index level. And we can apply the same analysis to the global portfolio with Newton and then that the portfolio is managed by legal in general now in some like the main headline is that the reduction in investable universe in terms of market cap for all of the portfolios apart from UK is relatively modest actually so it's ranging from 0.2 percent for Pacific extra pan equities up to 3.8 for emerging markets. They're not levels that concern us. The UK is a bit more notable. So it's you know, reduction of like 10 percent in the universe that's coming from your to two stocks, which will be aware of is a VP and shell what the analysis then did was, you know from a pure theoretical statistical approach you can work out if you excluded those two companies from the UK what impact does that have on your range of returns versus the index and that is encapsulated by a statistic called tracking error. Now, it's not perfect and there's always going to be flaws in the tracking error. But what a tracking error of 2.1 means is that 2/3 of the time you'd expect the performance of a portfolio that is exactly the same as the index but excludes BP and shell is going to be ruined plus and minus 2% of the index and then 1/3 of the time it could be wider. Now again, those levels of tracking error are not particularly concerning in our view. What we did we actually converted the estimated tracking errors for your equity assets and then translated to what that would mean at your overall portfolio because the key is you've got a your primary objective in terms of return on the assets is to get a return at least in line with your discount rate and to hopefully outperform it. So roughly speaking at the last variation your discount rate was like 4.4% our calculated expected return on the investment strategy on all assets was 5.9. If we translate the tracking error of the reduced equity universe on your equity assets. In our estimation your expected return of 5.9% and that's over a 10-year period varies by 10 basis points. So the expectation is a impact sorry .1% so that 5.9 we then translate that into an estimated range of 6 to 5.8 now. We don't think that is meaningful enough. To suggest that if it was theoretically possible to invest in a reduced universe that would that would compromise your ability to achieve the returns that you need. And we're also being like very we think it's important to acknowledge that you know, if you exclude companies it could have a positive or could have a negative, you know, we're not just focusing on the negative impact here. There's going to be periods where it actually that where there could be some upside and it's not all about downside. So in terms of the pure numbers the pure analysis in terms of the theoretical question of the impact on the investable universe we concluded that we weren't actually that concerned about it. There's also some analysis in terms of carbon metrics and you'll see some of the impact of that. So as you'd expect you do see some reductions in the carbon intensity and other metrics for the majority of the portfolios. It's not it's not it's going in the right direction. Assuming you want to see reductions. What we would say there is for some of the overseas portfolios for example managed by Algym the changes were very relatively modest obviously more meaningful for the UK. Now if you if you did have a reduced universe you'd see it kind of like a day one impact in terms of reduction in these metrics. It's important just to be aware that that wouldn't necessarily help you make further progress to net zero and the future level of carbon reductions. You need to see you definitely be looking to see further progress across the universe across the spectrum of companies that you invest in. So acknowledging that this was a kind of theoretical exercise to look at the impact of the investable universe and then think about what impact that could have on your ability to achieve your expected return and then thinking how does that relate to what you need to achieve from a discount perspective? Our view is it's a relatively modest impact. Thank you Steve. Thank you. Could I open it up to questions or comments? George. Yeah predictably. Thank you very much for this analysis. I think it's as all analysis it comes with Caspiats. There are always ways you could maybe do it slightly differently but I think you it's done a very good job of sort of answering the central question of what would the impact be were we to exclude fossil fuels from our investment as a pension fund and what would the financial impacts of doing so be and to me the conclusion that our overall best estimate of returns stays the same at 5.9% with a plus or minus 0.1% tracking error is such that it's quite clear that fiduciarily speaking we would not in any way be jeopardizing our ability to exceed the discount rate which is the central goal we have as responsible stewards of our members money. I think obviously the question of having this information what we choose to do with the benefit of this information of course is up to us as a committee and I certainly wouldn't wish to suggest we should try to make policy on the hoof off the back of seeing report. So my view on this is it it would merit a further discussion in some way but so I might be helped out some suggestions at some point on how best to do that. But my my initial impression of this is that one thing that stands out to me is is that obviously probably the biggest if you look at the figures the biggest thing which stands out as a potential downside of this of if we were to go down the route of excluding fossil fuels is the large proportion of the relatively large proportion of the index that's being excluded for the UK specifically and I mean, I think mostly think of that doesn't seem like a good thing. However, what I would have it what I'd want keen to highlight is obviously that a excluding that portion of UK universe investment universe doesn't actually materially impact our bottom line as a pension fund. But also I think what's very important to bear in mind is that that is actually more of a reflection of the fact that the UK as investment universe is overweighted towards fossil fuels compared to the global economy because we have two major multinational fossil fuel companies headquartered in the UK one of which only headquarters recently to avoid a an unhelpful climate court case in the Netherlands. So if so an investment also investments in the UK market as a whole or the share that we're investing in are actually are overexposed to fossil fuels compared to the global economy. So rather than seeing that 10% reduction in the universe as being a negative thing. I would rather I my impression is that that would probably actually be a welcome reduction in risk and ensuring that we aren't overexposed in an area where we currently are when we're investing in the UK. I mean again, I'd be curious to know if you need to know if there are any things about how much the UK is overweighted towards fossil fuels compared to other investment markets. By recollection I do of course quite a substantial percentage but I don't have the exact figure to hand. But in any event, I mean my view looking at this is that as has been argued for some time the financial impact of excluding fossil fuels is negligible to our success as a fund whereas the carbon reduction that would be the carbon intensity of a fund as a result. That would be benefiting as well is quite substantial and obviously I appreciate that there are the usual arguments about whether investing is sending a positive signal to markets or whether it's just missing out the opportunity to engage and I don't intend to if there's probably no point in rehearsing those arguments because we've heard them enough times already. But certainly to me, I think the main argument that's been made before against divestment is that potentially it would be risking our fiduciary duty and the countervailing argument has always been that actually exposure to fossil fuels is a serious long-term and predictable fiduciary risk. But we now have also have evidence showing us quite clearly that there is in fact, no fiduciary impact in a harmful way of divesting from fossil fuels. So with that in mind, I would like to request off the back of this report of this item of the agenda that we schedule an item for discussion at a future meeting in terms of looking at in more detail what the potential exclusion of fossil fuels might look like and I say that because I'm quite aware that as has been mentioned, the large part of money is managed through borders coast partnership. Therefore, we do not have, it's not within our gift to unilaterally dictate how that should be managed. We'd have to work with partners on it. Similarly, I'm sure that our other fund managers would also have views on how something like this could be implemented, which is why I'd be reticent to try to suggest let's just go off and do something off the back of this, but I do think these results merit further investigation of what potentially implementing something like this could possibly look like as a prelude to us having a better understanding of whether we want to make a decision to go down that route or not. Thank you. Thank you, George. Kelvin. Yeah, thank you. Very, very interesting report and come out with a result that I've said I wasn't actually expecting. So fascinating really. Yeah, and I'd like to echo a little bit about what George has said and understand the actual practicalities. So if we were minded to think about divesting how straightforward that is when you're in a fund with not only border to coast people, but also lots of other investors in some of the LG funds. And so I'd need to understand a little bit more about that and what the impact of that would be and also, you know, what costs are involved in doing that. Richard. The key part of the presentation for me was the phrase if it were possible. If it were possible and I think an analysis of the possibility of it is going to be part of the process too. Kevin. Yeah, I'm just going to note in the piece on the benefits and trade-offs the impact on supporting high emitters through to transition has got to be going there as well. It does rather point that we could be free to use rather more pressure on some of those people than we currently are and I think that would be a good thing to actually get them to change their ways particularly because I recognize that things like petrochemicals which the oil companies also produce form the basis of most of the civilization of the world in terms of plastic and all the chemicals and everything else that's produced. You know, what's stupid is burning oil just to create energy. So that's the wasteful bit, but I want to see them move to things where they're supporting biodiversity more where they are actually concentrating on the other side of their business and developing those. So, you know, this is a weapon I think for us to say, you know, we're free to actually be really quite harsh in terms of pushing them along. Thank you and I think probably Trevor's made the point that you have to make in that regard. Yeah, I mean my view is very simple actually and that is I think that I would not wish to discourage the companies that you have in mind from exploring number one to find out what minerals are where and then extracting those minerals which are of value. I just think that burning the result is criminal as simple as that and we have to find better ways of powering that which currently is generated by burning petrol essentially, diesel I suppose as well, but those sorts of fuels. So, but not to lose in the process the resultant chemicals and it's not only them either actually. This is what I was getting at earlier on in a separate conversation that there are industries which are dependent on industries and some of those industries you wouldn't want to lose. And so we have to be careful that we don't disrupt those industries inadvertently by trying to solve a separate problem. So that's my position overall. George. Yes, I appreciate we're probably now getting somewhat ahead of ourselves in terms of the merits, but just on the argument about the merits, I would make the point, two points around the arguments about the alternative uses for hydrocarbons, which is that even looking at plastic and medicine and all the other things which are which are oil and fossil fuel derived and industries around the world, they represent a very small proportion of the overall consumption of fossil fuels. The vast majority of fossil fuel consumption continues to be as that fuel for energy for transportation. That will always be the lion's share of those industries and the reality is vast, even if you were to keep plastic production and oil usage for non energy purposes, the same as it is today for the next hundred years, the overwhelming majority of discovered oil reserves would not be needed because we are talking about a very small percentage of the actual output of oil and gas fields. And I'd also make the point that just, you know, speaking as a borough council of the portfolio holder responsible for waste and environmental services, the proliferation of plastic throughout supply chains as the cheap and easy way to do things has been a tool of convenience for businesses and industries all around the world, but environmentally it has been an absolute disaster not just for the natural world, but also for us in terms of the health effects of micro plastics making their way into the food chain and water supply. So, you know, even if you set aside the energy impacts of fossil fuels entirely, I still think there's probably a good argument, a strong argument to be made that the vast majority of non energy uses of fossil fuels are still things we should be seeking to eliminate in the medium term anyway, but again, that's getting ahead of ourselves, but I do want to just make the point it's not just simply a case of burning is wasteful. I think there's an argument to be made about using it for the vast majority of current uses is inherently wasteful and harmful. Thank you. I would just notes the slide on page 211 the potential benefits and trade-offs and you know, they are we talked about the session. We're going to have on investment beliefs and in fiduciary duty and there are many other emitters of carbon that we know of so and the implementation point that Richard made is very very strong. So we will come back to this and a note to what you've asked for and we'll take that into account. So with just wondering whether it might be worth just amending our actual headline and go back to it the actual headline recommendations. We've got for this item are simply to note reports. I don't know if might it and I'm looking to you for guidance here, but might it perhaps just be worth a conditional one or to say that we agree to undertake further work to examine the potential potential options around the exclusion of fossil fuel have whatever word and we want but something along those lines. So even if we're not got a scheduled item or we're not asking something specific. We've actually committed intent made and officially decided as a committee that we want that we have agreed to look at this further at a future date and we can then have a discussion with officers about how best to do that because it I think the majority of you express seem to take the more discussion on this and more information would be helpful. I mean, it's we do set our forward plan, you know, that was sort of second or third items on the agenda. So we have the ability to come back to this and and I would suggest as you know as a consequence of what we're going to do on the work on investment beliefs Etc that you know, we would phase it in as part of that and I wouldn't necessarily want to prejudge that and where and when Etc. I do hear what you're saying chair. I guess sort of my concern is that the forward plan and for that matter VR. I work without to be doing of the reset those we set those before we came to this report about your opportunity to discuss it and I know and I couldn't see anything on the agenda for either this committee or for the RI subcommittee which would have naturally covered revisiting this. So I mean, I'm happy to suggest we just go with the recommendation does best that on the agenda, but would it just be perhaps possible to ask about our next meeting we have if officers could bring forward a proposal for adding this to the agenda of a VRI subcommittee or this committee as a whole at some point even so given the opportunity to come up with a proposal for how they feel the best way to it would be but to actually make sure that at our next meeting we are at minimum deciding how we want to discuss this further. I think probably we want to discuss it when we've we've looked at our you know, the strategy we're going to do in investment beliefs. So that would be anything we do would be a consequence of that which we're going to look at in September and later. So Neil any comments on this and I'm taking all the points on board and not just screaming than him. I think the question of divestment is by definition an investment belief currently our opposition is to engage rather than divest and we can certainly make sure that that question is included in the and well, it will be by definition included in the investment beliefs conversation and that will best inform how we then take that forward. So but just to just to expand on that slightly I think but the point is though the question of what the belief is I think the view of multiple speakers was that this information is helpful, but in order to determine what our belief should be we need more information about what for instance the implications would be is it actually possible in terms of implementation or the rest of it and I think what that might look like so that we can make a decision on what our belief should be is different to aggressive just simply what our belief should be and so what I'm quite keen on is that we do actually have some further analysis looking at the is it possible and what would that look like before we decide what our belief should be. But we would sorry that we're only talking about a particular sector here and it may be that there are other areas where we talk about the implications of divestment rather than engagement at a later date. So it's the actual philosophy the belief system that we are reassessing and the engagement piece is more it was was certainly as it's laid out in the RI policy although I'm happy to for us to go back over that is more than just financial implications. It's whether or not we wanted to make a positive impact on through an engagement process rather than a divestment process. With respect Neil I'm sorry, but I feel that's something of a cop-out because every time we've had this discussion previously what our beliefs are have been driven by concerns over what is possible. What would the practical implications of this be inherently in any policymaking you don't just start with a principle with no consideration whatsoever as to implementation you temper your principles by what is realistic what is practical and I think if we do what you seem to be suggesting is that we just need to focus on this from a point of view of principles and then want to charge on principles then worry about the implementation. I feel that in my view and I imagine the view of most members of this committee is that that you know, it's there's no point just talking about principles as an abstract because every time we talk about principles we quickly get discussions about what would this mean in practice and I think in this case, this is something where we've got some information about a financial impact but no idea of what the practical implementation of it might look like and what the consequences of that could be and I think without that it is very difficult to have a productive discussion about what the principle should be and I know what I'm hoping for for me is that you can perhaps offer some suggestion some encouragement that we will in fact have some further information to guide us about the practicalities before we just come back to another discussion about principles because we never have those discussions as an abstract. They are always driven by practical considerations and indeed when we talked about engagement previously all the arguments in favor of engagement were based by a concern about the practical impacts not about the principle. So, you know, I think it's very hard therefore to argue with straight face that that it's just purely about principle and the practical considerations come up purely come afterwards George. I think they're very much past and past sort of the whole thing. We do have this in our subcommittee. My preference would be to leave the recommendations as they stand, you know, you can raise it again. We're looking every meeting at our forward plan and indeed as you know, we're going to have our subcommittee. We're going to look at that and the practicalities. I think do have to be part of that and you know have you have my commitment to include that so I prefer to leave these recommendations as they stand. I'm satisfied with that. Thank you. Thank you. Thank you. So members. Can I just draw you to the recommendation to note alignment of the RI policy to industry best practice to note the report by Mercer's on the investable universe in relation to potential net zero dates and to note the report by Mercer on the potential impact on the fund from excluding the largest 25 fossil fuel companies globally from the investment universe and also to note the current underlying exposure to the largest 25 fossil fuel companies. So is that agreed? Okay. Thank you very much. We're coming to the exclusion of the public which I will now read and then I'm suggesting we do take a 10-minute comfort break. So I will read this under section 100 a of the local government Act 1972 the public be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information under the relevant paragraphs of part 3 of schedule 12 a of the act. So if we can stop the webcast, please and if we can come back by.