Agenda item

The Committee received a presentation from Mike Weston, Chief Executive and Callum Campbell, Head of Client Services and Stakeholder Relations of LGPS Central.

In the ensuing debate, the following points were raised:

·         There remained a debate as to whether the Pool was meeting the requirements of its partner funds. Mike Weston responded that he was clear that Strategic Asset Allocation was the responsibility of the partner funds and it was LGPS Central’s responsibility to provide suitable investment products to meet those needs. Individual funds had different perspectives as to how best to invest their assets and LGPS Central was obliged to try to meet those needs but the reality was that compromise solutions had to be found

·         In response to a query, Mike Weston explained that LGPS Central had recently launched a pooled asset investment fund of £2.1m in All World Equity Climate Factor which he hoped would give Responsible Investment (RI) a wider audience 

·         In response to a query, Michael Hudson, Chief Financial Officer indicated that he had no concerns about the Fund’s current total level of fund assets under management by LGPS Central Stewardship at this stage, especially considering advisory passive holdings

·         In response to a query about the Pool’s approach to RI and in particular investment in fossil fuel companies, Mike Weston commented that the arguments for investment in fossil fuel companies were nuanced. For example, although BP was seen as a major fossil fuel producer, it also invested in renewable energy as they were conscious that the supply of fossil fuels would end one day. It was important to enter into dialogue with companies to understand their RI approach and to invest in companies that had a commitment to do the right thing

·         It was disappointing that there was a lack of action points in the LGPS Central presentation. There remained communication issues and a perception that the Pool acted as it saw fit rather than in the best interests of partner funds. Mike Weston responded that he was conscious of the fact that some partner funds were in the early stages of the transfer of assets into the pool. He stressed that although not necessarily reflected in the presentation, action was being taken and more detail would be provided to a future meeting. Callum Campbell acknowledged that communication with partner funds could be improved. A lot of work was taking place behind the scenes which was not obvious to members. He hoped that partner funds could see the change of focus of the pool with the client at the heart. The Communications Strategy was being reviewed including a revamp of director performance reports and an improvement of the web site and social media presence

·         Had LGPS Central considered approaching funds from outside the pool to join? Mike Weston responded that the Pool’s primary focus was on ensuring that the business affairs of its partner funds were conducted in the right way. There was a commitment amongst the pools to act collaboratively rather than in competition

·         In response to a query about the Pool’s employment strategy in relation to gender balance, Mike Weston explained that the pool was committed to employing the best person for the relevant post whilst also being aware of the implications for gender balance. He would provide a copy of the pool’s employment strategy for members

·         In response to a query about the vacant NED position, Mike Weston indicated that the position remained vacant however interviews for the position had been held and the Board had a preferred candidate which would eventually require the approval of the Shareholders

·         The Chairman thanked Mike Weston and Callum Campbell for attending and looked forward to a further update at a future Committee meeting. 

RESOLVED that the LGPS update be noted.