The Local Government Pension Scheme Local Pension Board met on Friday 7 November 2025 to discuss updates on key risks, the pension fund's statement of accounts, and its responsible investment report. Decisions were made regarding the reassessment of IT security and data handling risks, and the board noted the progress on the pension fund's financial statements and its decarbonisation targets.

Update on Risks E4 and E5

The board reviewed an update on risks E4 (member data is compromised) and E5 (member data is compromised through a breach of IT security controls). Following concerns raised at previous meetings, officers collaborated with the Local Pension Partnership Administration (LPPA) Chief Technology Officer to reassess these risks.

Risk E4, concerning data sharing controls, has been updated to reflect strengthened training, certifications, and data handling protocols. The risk level tolerance for this risk has been increased to 9, based on a possible likelihood score of 3 and a moderate impact score of 3.

Risk E5, relating to IT security breaches and cyber security attacks, has been revised in light of the Pensions Regulator's view that such risks are a matter of when and not if. Enhanced controls are in place, but the risk level tolerance has increased to 16, reflecting a probable likelihood score of 4 and a major impact score of 4. The board noted these updates, with further discussion on cyber security planned for a later part of the meeting.

Pension Fund Statement of Accounts

Robert Winterton, the Finance Manager for the fund, presented an update on the Pension Fund Statement of Accounts for the financial year 2024/2025. The draft accounts, published on 30 June 2025, showed a net asset value of £6.4 billion. Subsequent updated investment manager valuations have increased this figure by £7.8 million. Specific increases were noted from Pantheon (£4.6 million) and Macquarie (£3.2 million).

The board was informed that KPMG's field testing work was slightly delayed due to leave within the firm, but they anticipate presenting their findings at the Audit Committee on 4 December 2025. The deadline for audit sign-off is 27 February 2026, with a potential Audit Committee meeting on 12 February 2026 for accounts sign-off.

Discussions also touched upon the potential separation of pension fund accounts from the administering authority, a matter currently under government consultation. The board noted the report.

Pension Fund Responsible Investment Report

Sandy Dickson presented the Pension Fund's responsible investment report, focusing on the fund's decarbonisation progress as of 31 March 2025. The report highlighted the fund's long-term net-zero target for its investment assets by 2050, with interim targets for its listed equity portfolio. This includes an ongoing emissions intensity reduction target of 43% by 2030 against a 2020 baseline.

The analysis, covering listed equities and corporate bonds (approximately 60% of the portfolio), indicated that the fund's listed equities are 27.6% more efficient than the wider market (MSCI ACWI) in terms of greenhouse gas emissions. While the listed equity portfolio has seen a 19.3% reduction in its carbon footprint since 2020, it is currently slightly behind the Intergovernmental Panel on Climate Change (IPCC) decarbonisation pathway. However, good progress was made over the last year with a 12.4% reduction.

The report also noted that the fund's corporate bond portfolio has seen a 23.3% reduction in its carbon footprint against a March 2022 baseline, placing it ahead of the IPCC pathway. The fund has not yet set specific decarbonisation targets for its corporate bonds.

The report detailed changes in equity managers, including disinvestments from Baillie Gifford UK Equity and Allianz Global Equity, and investments in Dodge & Cox Global Equity, UBS Climate Aware, Robeco EM Equity, Robeco Quality Equity, and Osmosis Core Equity. These strategic shifts have led to greater exposure to green revenues.

The board discussed the challenges in obtaining reliable data for less liquid assets such as private markets and property, but noted that industry work is ongoing to standardise data collection. The report was noted by the board.

Dates of Future Meetings

The board noted the dates for future meetings: 12 December 2025, 13 March 2026, and 16 July 2026, all scheduled as virtual meetings. An additional meeting in February 2026 was highlighted as being necessary to approve recommendations to full council regarding joining the Border to Coast Investment Pool, and to review the draft responsible investment policy and investment strategy statement.