This meeting of the Pension Fund Investment & Administration Panel will receive an update on the performance of the Fund, agree an updated net-zero roadmap and receive a presentation from the London Collective Investment Vehicle (LCIV). The meeting pack also contains a number of reports for noting, including the annual reports of the Pension Board and on the Fund's carbon footprint.

Fund Manager Performance to 30 June 2024

The committee will receive a report on the performance of the fund managers appointed to manage the Royal Borough of Greenwich Pension Fund's assets. The investment managers are:

• BlackRock - managing Global and UK equities and cash.
• LGIM - managing Global Low Carbon equities.
• Fidelity - managing bonds, multi-asset credit and global emerging markets.
• CBRE - managing UK property
• London CIV - managing multi-asset real return, multi-asset absolute return, renewable infrastructure and private debt.
• Partners Group - managing diversified alternatives.
• Wilshire - managing private equity.

The report, Fund Manager Performance to 30 June 2024, is not publicly available, as it contains commercially sensitive information.

Net Zero Roadmap Update

This report reviews the progress made by the Pension Fund in relation to its net-zero ambitions since July 2022, when the Panel set a net zero target of 2040. The Royal Borough of Greenwich Council's Carbon Neutral Plan, agreed in 2019, pledged to reach net zero carbon emissions by 2030. The Panel is being asked to approve an updated roadmap, 7.1 Appendix A - RBG Pension Fund Net Zero Roadmap, for transitioning to net zero.

The report, 7.0 Net Zero Road Map Update Report 2024, says that:

Evolving the Fund’s investment strategy to take account of the opportunities and risks presented by climate change should be done within the context of a broader plan, ensuring that all issues are properly addressed.

Since 2022 the fund has undertaken work intended to reduce its carbon emissions, including:

• Establishing a dedicated Responsible Investment (RI) Policy
• Commissioning a carbon footprint baseline report as at 31 March 2022, using the London CIV's Climate Analytics service.
• The introduction of a manager monitoring programme, where managers are invited to attend Board meetings to present on ESG-related themes, including net zero, and stewardship activities.
• Committing £42.5m to the London CIV's Renewable Infrastructure Fund.
• Investing 14% of the Fund’s assets (current value c£280m) in a low carbon global equity mandate with LGIM, which the report says achieved a c50% reduction in carbon emissions. This fund aims to further reduce carbon emissions by 7% annually.
• Updating the Fund’s Annual Report to include a climate change section reporting on the Fund’s activity in line with the four core elements of the Taskforce for Climate-Related Financial Disclosures (TCFD).

LCIV Update on Operations and Performance

The London CIV will be attending the meeting to give a presentation to the Panel on the organisation's operations and performance. No report pack has been provided to support this presentation.

Pension Fund Carbon Footprint Data 31 March 2024

The Panel will note the climate analytics data for the Royal Greenwich Pension Fund as at 31 March 2024. The report, Carbon Footprint Report as at 31 March 2024, is supported by Appendix A - LCIV Climate Analytics Report 31 March 2024, which contains detailed analysis of the carbon footprint of the assets held by the Pension Fund broken down by investment manager and benchmark. The climate analytics information available to the Fund covers approximately 78% of the value of Funds assets, up from 57% as at 31 March 2023. The report says that:

It is important to note that the quality of the data available remains more relevant than achieving maximum coverage at this stage.

This analysis shows that, since 31 March 2023, the Fund has reduced its direct and first tier indirect emissions¹ by 58.1 tonnes of carbon dioxide equivalent per million GBP invested (tCO2e/mGBP)², from 154.6 to 96.5. It has also reduced its emissions under scopes 1-2-3 by 77.1 tCO2e/mGBP, from 831.3 to 754.2. Direct and first-tier indirect emissions are the emissions that a company is directly responsible for through its own operations and those from the first tier of its supply chain. Tonnes of carbon dioxide equivalent per million GBP invested is a measure of the carbon intensity of an investment portfolio.

The report also finds that the Fund's implicit temperature³ has decreased from between 2 and 3 degrees Celsius to less than 1.75 degrees Celsius, aligning the fund with the objectives of the Paris Agreement. The Fund's fossil fuel exposure, measured as a percentage of the value of its holdings, has also decreased to 9% from 12.24% since 31 March 2023.

A portfolio's implicit temperature is the average temperature increase that would be expected if all of the companies in the portfolio continued to emit greenhouse gases at their current rate.

The Panel will also be receiving training from the LCIV on climate metrics, supported by a report pack that has not been made public.

Annual Report of the Pension Board 2023/24

The Panel will note the annual report, Appendix A - Pension Board Annual Report 2023-24, of the Pension Board. The purpose of the Royal Greenwich Local Pension Board is set out in the report, Pension Board Annual Report 2023-24, as:

to assist the administering authority of the Fund (the Royal Borough of Greenwich) in its role as scheme manager.

It continues:

The Board enhances scrutiny and governance within the Fund, helping to ensure that it complies with legislation and the law relating to pensions.

The Pension Board met four times during the reporting year. The Board's membership and attendance are set out in the report. The report contains an appendix, Appendix B - Board Business Plan 2023-24, which lists the dates and items discussed at the Board meetings. It also contains a draft of the Board's Appendix C - Board Business Plan 2024-25 for the next reporting year.

Knowledge and Understanding Policy and Framework

The report, Knowledge Understanding Policy and Framework Report, sets out the Royal Borough of Greenwich Pension Fund's Knowledge and Understanding Policy and Framework. The report contains an appendix, Appendix A - Knowledge and Understanding Policy and Framework, which details the policy. The Policy is intended to ensure that:

all members and decision makers carrying out their roles and responsibilities on behalf of the Royal Borough of Greenwich Pension Fund & The Royal Borough of Greenwich are and remain sufficiently knowledgeable & competent to do so.

It applies to members of the Pension Board, members of the Panel and officers responsible for managing the fund. The policy notes the Council's legal duty, under the Markets in Financial Instruments Directive II (MiFID II), to demonstrate appropriate levels of knowledge and skills. The policy also notes the Pensions Act 2004's requirement for all members of local pension boards to understand the rules of their pension scheme, its administration, and its policies. It also notes that the Responsible Investment Draft Guidance, consulted on in 2021, suggests a need for:

anticipated requirements of the Task Force on Climate-related Financial Disclosures (TCFD).

The report discusses the Enlighten online training platform provided by Barnett Waddingham. The platform is free for the Council to use, and provides access to training videos on a number of topics. The report notes that, in the last year, one Pension Board Member used Enlighten, whilst no Panel Members did so.

The report contains the following statement:

The Royal Borough of Greenwich recognises that effective financial administration and decision-making can only be achieved where those involved have the necessary knowledge and skills. Accordingly, the Royal Borough of Greenwich will ensure that it has formal and comprehensive objectives, policies and practices, strategies and reporting arrangements for the effective acquisition and retention of the relevant public sector pension scheme finance knowledge and skills for those in the organisation responsible for financial administration and decision-making.

The policy lists the eight topics of the CIPFA Knowledge & Skills Framework that the Council uses to demonstrate its knowledge and skills:

• Legislation & Guidance
• Governance
• Administration & Communications
• Accounting & Audit Standards
• Procurement & Relationship Management
• Investment Performance & Risk Management
• Financial Markets & Product Knowledge
• Actuarial Methods, Standards & Practice.

The Panel is being asked to agree the Fund's Knowledge and Understanding Skills Policy and Framework and to:

inform new members and remind members to participate in a free new online training platform provided by Barnett Waddingham.

Minutes

The minutes of the previous meeting, held on 22 July 2024, are available here: Minute. They record that the Panel noted the performance of the Fund to 31 March 2024 and agreed the Pension Panel's Business Plan for 2024/25. The minutes also record that Councillor Nick Williams, Chair of the Pension Board, was in attendance.