This meeting was scheduled to consider a wide range of reports and requests, including a petition on divestment from companies operating in conflict zones and a response to a government consultation. The meeting was also scheduled to receive a number of updates on the Pension Fund's performance and how it is being managed.

Response to Petition on divestment from companies selling arms to Israel

A petition containing over 4,000 signatures was presented to the Council on 20 January 2025, requesting that the Council:

"urgently undertake a thorough and transparent audit of its pension fund investments in companies involved in any way in the ongoing Israeli occupation of and military assault on the West Bank and Gaza with a view to divesting from them”

During the Council meeting, it was agreed that the matters outlined in the petition be referred back to the Pension Committee for further review. The petition was submitted to officers on 20 December 2024, following the escalation of the conflict in Gaza in October 2024. It calls on the Council to divest from companies involved in any way in the conflict. The report pack for the meeting includes a report that describes the legal and financial arguments for and against divestment, as well as the approach taken by other London boroughs. It highlights that, whilst several councils have discussed responsible investment measures related to the Occupied Palestinian Territories (OPT), none have made definitive commitments to divest from the region, with legal, financial, and operational concerns being significant factors in their decision-making. The report also highlights the role played by the Local Authority Pension Fund Forum (LAPFF) in upholding human rights in relation to companies operating in the OPT, including how LAPFF has in the past:

“Evaluate[d] the various risks companies operating in the occupied territories incur, and how far such risks undermine the business operations of those companies in the context of allegations of human rights abuses.”

The report states that, whilst respecting the decisions of other councils, it is important that all Pension Funds balance ethical considerations with their own responsibilities to their members, known as their fiduciary duty¹. It also notes that:

“Camden’s fiduciary duty mandates that investment decisions prioritise financial benefits for scheme members over political factors.”

It makes five recommendations for actions that the Committee could consider:

1. Commission an independent review of fund holdings to determine the extent to which the fund is exposed to defence companies which derive revenues from activities in conflict zones around the world, including the OPT.
2. Ensure that the upcoming annual stewardship review prioritises engagement on conflict zone exposures. Additionally, officers will explore advancing the development and implementation of a comprehensive human rights policy, building on current efforts that have already been agreed upon to strengthen our approach.
3. Further enhance our award-winning Responsible Investment strategy by taking steps with a view to integrating SDG 16, focused on Peace, Justice, and Strong Institutions, into our core investment beliefs at the next investment strategy review. This will complement our ongoing commitments to addressing climate change and reducing inequalities, reinforcing our holistic approach to responsible investing.
4. While direct exclusions may pose legal and financial challenges, alongside Action 2 above, Camden will give consideration to strengthening its Responsible Investment framework by introducing a Conflict Zone Exposure Policy within its ESG framework, similar to climate and fair labour policies at the next Investment Strategy Review. This could ensure that investments in conflict-affected regions undergo heightened due diligence and engagement, and would be developed in step with our investment partners and advisors.
5. Continue to proactively engage with our fund managers to ensure they are actively identifying, managing, and mitigating risks and exposures related to conflict zones, human rights, and other critical ESG factors. This will guarantee that our investments align with our ethical and responsible investment principles.

Performance Report

This report outlines the recent performance of the Pension Fund investment portfolio.

It notes that global markets experienced notable shifts in Q4 2024, as investor sentiment responded to diverging regional economic conditions and policy adjustments.

It states that the Fund's value at the end of 2024 was £2.2bn, representing an increase of 2.66% (£57m) over the quarter. The report notes that the fund has not met its target asset allocations and that the fund is overweight in equities. It also details the performance of all of the fund's individual investments, comparing performance to benchmarks and targets.

It notes that:

While the Fund’s overall long-term performance remains robust, its recent challenges with specific active and alternative investments highlight the value of proactive portfolio adjustments to mitigate volatility.

It also contains detailed commentary from the Council's Independent Investment Adviser on the performance of the markets and the individual investment funds.

Engagement Report

The Engagement Report provides an update on engagement activities undertaken on behalf of the Pension Fund since the last meeting, with specific information about the activities of the Local Authority Pension Fund Forum (LAPFF)².

The report details LAPFF's engagement with electric vehicle manufacturers, with a focus on how they are mitigating and managing human rights risks in their supply chains. All the manufacturers met were:

able to demonstrate progress in their respective approaches to managing human rights risks in their battery mineral supply chain

The report also details LAPFF's engagement with Booking Holdings and Motorola solutions over their approaches to human rights due diligence in conflict affected and high risk areas.

The report also details LAPFF's concerns about the weakening of standards relating to new entrants to the London listed companies’ market and its efforts to engage with the London Stock Exchange Group (LSEG). LAPFF wrote to the Chair of the LSEG:

requesting an evidence-based approach, and to supply the evidence for assertions made to date.

The Engagement report goes on to detail LAPFF's ongoing engagement with Drax Group plc over its business model and the use of wood pellets for energy generation. It notes LAPFF's concern over Drax’s dependency on government subsidies, and the environmental impact of importing biomass for energy.

The report concludes with LAPFF's engagement with two airlines – Wizz Air and International Consolidated Airlines Group (IAG) - over their decarbonisation strategies, and highlights that LAPFF:

recognises these challenges and may explore future engagement with airport authorities and regulatory bodies to gain their perspective on these issues

It also provides an overview of voting activity by the Fund's Corporate Governance Advisor, Pensions & Investment Research Consultants Ltd (PIRC). It states that a total of 1,665 resolutions were voted upon across 167 meetings in the quarter, and lists all of the resolutions that were voted on. It also states that 1,075 (65%) votes were cast 'for' resolutions and 557 (33%) 'against'.

Voting and Corporate Governance Annual Review

This report reviews the proxy voting carried out on behalf of the Pension Fund from 1 January 2024 to 31 December 2024. It describes how the Fund's Corporate Governance Advisor has voted on the Fund's behalf during the year. The report notes that the fund has voted on 23,405 resolutions at 1,695 company meetings. This was a very significant increase on the previous year, when only 12,138 resolutions were voted on at 679 meetings. The increase was primarily due to the adoption of pass-through voting on pooled funds. It also notes that the Fund supported 58.5% (13,708) of resolutions, with 38.1% (8,921) being opposed. The report also provides details of the voting recommendations on key issues such as executive pay, auditor appointments and gender diversity on boards.

The report highlights that support for the election of company directors fell considerably compared to the previous year. In 2024, the Fund supported 65% of directors, compared to 78.8% in 2023. It attributes this to:

the diversification of the portfolio ... which has brought greater exposure to regions with companies having corporate governance practices deemed not in line with international best practice.

The report notes that, while 43.4% of the companies voted on were based in the UK, 36.6% were based in North America and 15.5% were in Europe. It provides a detailed analysis of the issues affecting levels of support for directors in the UK, North America and Europe, and makes several recommendations for changes to the Fund's voting policy for 2025. These include:

• Increasing the threshold for female board representation in the UK to 40%
• Strengthening scrutiny of auditor independence in the UK
• Introducing structured buyback criteria for responsible capital management
• Increasing the limit on issuing shares without pre-emptive rights to 10%, and allowing a further 10% for acquisitions
• Broadening criteria for climate risk assessment, incorporating: board oversight, climate skills, commitment to TCFD³/IFRS S2 reporting, capital expenditure disclosure, Paris-aligned lobbying, and just transition strategies
• Strengthening voting stance on remuneration & audit.

Voting Policy

This report contains the proposed voting policy for the Fund for 2025. It explains how PIRC will vote on behalf of the Fund at company meetings in the UK, the US and globally. It details the voting recommendations for a wide range of issues, such as:

• Approval of accounts
• Director elections
• Dividends
• Executive pay
• Auditor appointments and remuneration
• Share issues and buybacks
• Article changes
• Political donations

The report also proposes a number of changes to the policy.

London Collective Investment Vehicle Progress Report

This report provides an update on the progress made by the London Collective Investment Vehicle (LCIV)⁴ in creating sub-funds for the spectrum of asset classes, onboarding of assets and development of staff resource.

It lists all of the funds that the LCIV has launched during the last quarter, their underlying investments, and any costs savings that have been identified. It details the new funds and services launched during 2024 and the assets they have under management.

It also lists LCIV's stewardship priorities for 2025 and details updates on their governance, including the appointment of a new CFO, Chief Investment Officer, and Company Secretary.

It notes that the IREP is expected to be launched by the end of Q1 2025 and that an agreement has been finalised with CBRE Investment Management. It also notes that the first pension committee approval for the new service was received in December 2024.

MHCLG Consultation Update

This report provides an update on the government's Fit for the Future consultation, which is designed to strengthen the management of LGPS investments.

It lists all of the proposals for reform contained in the consultation document, and describes Camden's response to them.

Cash Flow and Membership report

This report details the Pension Fund cash flow and membership statistics over the last financial year and over the longer term.

The report notes that net cashflow to the fund in 2023/24, including investment income, was £33.32m, a significant improvement on the previous year, when the net cashflow was -£196.48m. This was largely due to a one-off bulk transfer that was made in 2022/23.

It details changes in employee and employer contributions and highlights that, despite increased pension payments in 2023/24, contributions have outpaced outflows ensuring a stable cash position for the fund.

It also analyses the age profile of the fund's membership, and shows that 54% of members are between the ages of 45 and 70.

Annual Report

The Local Government Pension Scheme Regulations require the Fund to produce an Annual Report. The report presented to the Committee was the draft version for 2023/24.

The report provides an overview of the Pension Fund's activities during the last financial year and its financial performance. It describes how the Fund is governed, how it is administered, and how its investments are managed. It also includes the audited accounts of the Fund for 2023/24 and a number of statements that are required by the regulations. These include:

• The Governance Compliance Statement
• The Funding Strategy Statement
• The Investment Strategy Statement
• The Communications Policy Statement.

Business Plan

This report sets out items that are proposed to be included on agendas for future meetings, and details of training for Members and officers. The report also details a number of changes to training arrangements.