Pension fund sets out responsible investment plans
A £3 BILLION local government pension fund has published a draft policy about responsible investing and is continuing to reduce its fossil fuel investments.
The Dyfed Pension Fund has 51,500 members representing 69 employers and aims to get the best returns for them in the long term.
Its new draft policy said responsible investment was a fundamental part of its overall strategy but one that had largely been delegated to its investment managers to date.
The policy said environmental, social and governance factors were important drivers of investment returns, and that the fund held the view that climate change presented a risk to the stability of every economy and country.
It said the fund was committed to moving its assets towards “net zero” emissions in the medium term, but added that engaging with companies it invested in was the better option.
The fund has reduced the level of its carbon emission investments in shares by around 20% since September 2020, which is faster than its 7% per year aspiration.
The draft policy was set out at a meeting of the Dyfed Pension Fund committee by treasury and pension investments manager Anthony Parnell, who said an element of the policy about promoting human rights was, he felt, as important as climate risk.
Cllr Deryk Cundy asked if the word “ethical” could be added to the draft policy, or whether it was implied.
Mr Parnell said it was implied, and that the policy hadn’t gone into subjects such as tobacco, alcohol and arms. He said these could be considered, but that what was ethical for one person might not be for another.
The Dyfed Pension Fund is one of eight local government pension schemes in Wales. They include the Wales Pension Partnership, which pools together many of their assets to decrease costs and try to improve returns.
The committee also heard that the fund was continuing to divest its Russian investments, where possible. Although these made up a very small proportion of the fund’s assets, the risk of global markets being impacted by the events in Ukraine and the wider economic climate were termed “catastrophic” in a report.
Asked what measures the fund could take, Mr Parnell said: “To be honest with you, we are exposed to this.”
There were mitigation measures that could and were being taken, he said, at a Wales Pension Partnership level.
Chris Moore, Carmarthenshire Council’s director of corporate services, said: “From a Dyfed Pension Fund point of view, the value of our Russian investments were very, very low anyway. Where possible, divestment has taken place.”