In Autumn 2022 Surrey Pension Fund consulted on their draft RI policy. SPAN did not think that the draft RI policy was good enough, so alongside other Surrey residents we responded to the consultation to made our views know. You can read the letter we submitted to the consultation below.
Our letter
For attention of the Surrey Pension Fund Committee:
We, the signatories to this letter, applaud the commitment that Surrey Pension Fund expresses in regards to the sustainability of the investments that are made on behalf of the members of the pension fund.
We are pleased to see that this commitment is being supported by the development of a more detailed Responsible Investment (RI) Policy and the opportunity to respond to this as part of this public consultation.
However, we are of the opinion that the released short questionnaire does not provide the opportunity for meaningful and balanced response, so have decided to respond to the consultation through this letter.
Areas of support
We support the following elements of the policy:
The use of the UN Sustainable Development Goals (SDGs) as foundation for the policy
Commitment to sign the Stewardship Code
ESG being part of identifying investment opportunities risks and being incorporated into portfolio construction
The belief that Responsible Investment is relevant in every asset class
The belief that Responsible Investment is relevant on time horizons
Acknowledgement that climate risk is a significant direct and indirect risk to all stakeholders
The engagement with consequences over divestment approach, but with clarification and exceptions as outlined below
Collaborative engagement
Voting as an important part of the strategy, but with further discussion of and amendment to the default voting position as outlined below
Areas that need improvement
We identify the need for more concrete actions and commitments on how the intentions will be implemented.
In particular:
Explicit commitment to meet Paris Agreement targets, in addition to stated support
Inclusion of a target date to reach Net Zero by 2035 or before
Inclusion of an interim 2030 target that should be more than half way to net zero.
More detail on how engagement activities will be made meaningful and effective. As a minimum this should include:
development of a SMART engagement action plan (specific, measurable, attainable, relevant and time-bound).
guidelines on what engagement with consequences means, in particular what consequences will be triggered at what stage in the process. (This is a requirement of the Stewardship Code which SPF intends to sign.)
Amendment of the SPF Bespoke Voting Policy to conform with the new RI policy on Voting at company meetings, and in particular:
when SPF disagrees with management on a proposal it should not prefer abstention over voting against management
SPF should not restrict its support for shareholder resolutions to only those which ask for improved sustainability disclosure. Proposals for action on climate change matters, should also be supported.
Fossil fuels should not be open to engagement with consequences, but should be divested, as moving away from fossil fuels is essential to meeting the Paris Agreement and reaching Net Zero.
We would also like to note that a positive response to the survey is an indication that respondents support the importance and intention of Responsible Investment and the policy, but not necessarily the thoroughness of the policy, the extent of the SPF commitment or the urgency with which you intend to implement the policy, as this was not covered in the questionnaire.
Conclusion
Again, we thank you for the opportunity to provide our thoughts on the draft Responsible Investment Policy and, as always, are open and interested to discuss this further with you.
Signed by
Surrey Pension Act Now