This meeting was about the Islington Pension Fund, how it is performing and how it should be invested. The meeting considered whether the Fund should change its investments to reduce their impact on climate change and to better reflect the council's goal of building a more inclusive economy in the borough.

Pension Fund Performance 1 October to 31 December 2024

The meeting was scheduled to receive a presentation on the performance of the Pension Fund in the last quarter of 2024. The report pack says the total value of the fund was £2,060m at the end of December 2024, up from £1,934m at the end of September 2024. Over the whole of 2024 the value of the fund grew by 14.4%, although this was less than the 11.4% achieved by the bespoke benchmark used to assess the fund's performance. The report pack contains a detailed breakdown of the performance of each of the investments in the fund, and a commentary on the performance of each investment by Apex, the council's independent investment advisors.

Investment Strategy Review Update On Implementation

The meeting was scheduled to consider a report on the implementation of the Investment Strategy agreed by the committee at its previous meeting. The report pack says the committee had previously agreed to investigate opportunities for a proportion of the fund to be invested in investments that contribute to the council's goals for community wealth building and social impact, and in investments in natural capital.

The meeting was scheduled to be given a presentation about opportunities to invest 50% of the 3% of the fund allocated to social impact investing. The presentation was to include a review by Apex, the council's independent investment advisors, of three investment opportunities that the advisors had been asked to review in more detail.

The committee had also previously agreed to allocate 3% of the fund to investment in natural capital through a fund managed by the London Collective Investment Vehicle.¹ However, the committee had expressed concerns about the fund's use of carbon credits² and asked for more information about them. The report pack says the committee was scheduled to consider a response from the LCIV to these concerns that says:

“While it may not seem ideal that heavy emitters could use carbon credits to offset their emissions, this is the primary purpose for many buyers in the market. Such credits are often purchased to meet sustainability goals or compliance obligations, which are critical components of reducing overall global emissions. It’s important to recognise that the carbon credit market remains nascent and is still evolving. Implementing exclusions could present challenges to the goal of maintaining an open, functioning free market. There is no current agreed policy of exclusion but this can be proposed in the future as the market matures.”

The LCIV Sustainable Equity Fund Review

The meeting was scheduled to receive a report about the LCIV Sustainable Equity Fund which manages £209m of the Islington Pension Fund's investments. The report pack says this fund has underperformed compared to its benchmark, and that the fund was under formal review by the London CIV.

The report also compares the LCIV Sustainable Equity Fund to the LCIV Sustainable Equity Exclusion Fund. This fund is very similar to the one the committee invests in, but it does not allow investment in adult entertainment, alcohol, fossil fuels, gambling, tobacco or weapons manufacturing. Because of these exclusions this fund has less of an impact on climate change.

The report pack says the committee was scheduled to consider delegating the decision about whether to transfer the council's investment from the Sustainable Equity Fund to the Sustainable Equity Exclusion Fund to Councillor Diarmaid Ward, the Corporate Director of Resources, with the proviso that the decision was dependent on the outcome of the formal review of the Sustainable Equity Fund being conducted by the London CIV, and that any costs associated with the transfer were reasonable.

TPR General Code Review Assessment

The meeting was scheduled to consider a report about whether the Islington Pension Fund is complying with The Pensions Regulator's (TPR)³ new General Code of Practice, which came into force on 27 March 2024.

The report pack says TPR has a responsibility to oversee the governance and administration of Local Government Pension Schemes. The Islington Pension Fund has previously used TPR's Code of Practice No 14: Governance and administration of public service pension schemes to assess whether it is complying with TPR's rules, but this code was replaced by the new General Code of Practice in March 2024.

The report pack says the committee had received training about the new General Code in July 2024. The report says the council is already complying with 25 out of the 28 requirements in the code, but that three requirements need more work. These three requirements are:

• Consolidating the documentation that describes the fund's internal controls into one place.
• Formalising the procedure for monitoring employer contributions to the fund, and recovering contributions that are overdue.
• Formalising how the committee defines, monitors, and reports on the roles and responsibilities of the people involved in managing the fund.

The report pack says the committee was scheduled to agree to receive a further report on these three requirements at its next meeting.

The London CIV Update

The meeting was scheduled to receive a presentation from the London Collective Investment Vehicle¹ about the new funds they are launching, the performance of the funds managed by the CIV that are already invested in by Islington, and the structure and governance of the CIV.

The report pack says the presentation was also scheduled to provide an update about the performance and monitoring of the LCIV Sustainable Equity Fund. The report says the CIV rates the performance of this fund as ‘3’ for skills, meaning ‘Enhanced Monitoring’ is required, and ‘4’ for value, meaning the fund is underperforming. The report says the fund was scheduled to be reviewed again by the CIV in June 2025.

The presentation was also scheduled to tell the committee that the CIV has appointed a new Chief Investment Officer, Jenny Buck, and that the CIV's monthly updates were being reduced to quarterly, although the CIV was going to start publishing a monthly newsletter instead. The report pack says the CIV was also scheduled to announce that its annual conference will be held in June 2025.

Pensions Committee 2025/26 Forward Work Programme

The meeting was scheduled to note a report on the committee's work programme for 2025/26. The report pack says the work programme included:

• A report on the council's progress in reducing the carbon footprint of the fund in June 2025.
• A review of the committee's four year business plan in September 2025.
• A discussion of the draft funding strategy statement in November 2025.

The report pack says the work programme was also to include a list of training topics for the members of the committee.