Highland Council Pension Fund


Divestment from General Dynamics now likely

Interesting information relating to the divestment campaign has emerged recently with the publication in the agenda for the Pensions Committee meeting held on 22 September of the minutes of meeting of the Investment Sub-committee on 12 March 2021.

The relevant parts of this minute read

7.  Equity Strategy Implementation
There was  circulated  to Members only Report No.  INV/5/21  by the Investment Advisor with recommendations for the Equity Strategy Implementation.
.   .   .   .
Thereafter, the Committee  considered the recommendations and decided as follows:-
.   .   .   .
ii AGREED to disinvest fully from the Pyrford holding in the Pension Fund;
.   .   .   .

iv AGREED that a new Investment Manager is identified to manage the proceeds from  the disinvestment  in Pyrford, with the amount to be invested with  the new Manager to be decided at a future meeting.   The  investment  with the new Manager  would be  in Global Equities with quality and Responsible Investment/Impact Investment focus that complement the long term growth investment style of Baillie Gifford, and thus increase diversification of manager risk. 

Persuading the Pensions Committee to take its investment management business away from Pyrford has long been one of the main objectives of the Highland Palestine / Highland Charter for Respondible Investment campaign.  If the re-investment of the funds they managed is made in the way suggested above the aim of divestment from General Dynamics will have been achieved - an achievement justifiably celebrated in a recent email from Highland Palestine


9 September 2021

Council adopts non-committal 'amendment' in place of fossil fuels and armaments divestment motion


A meeting of Highland Council on 9 September adopted without a vote a non-committal 'amendment' put forward by Councillor Ben Thompson, chairman of the pensions Investment sub-committee, in opposition to a motion proposed by Scottish Green Party councillor Pippa Hadley on behalf of the joint Fossil-Free Highlands / Highland Charter for Responsible Investment campaign, urging the Pensions Committee to divest from fossil fuels, armaments and other unethical investments.

Councillor Thompson's 'amendment' reads as follows
 

Highland Council: 
 
-  recognises the continuing, serious, and accelerating changes caused by climate change, and continues to work towards a carbon neutral Highlands by 2025.  
 
-  acknowledges that the pandemic has reversed progress in some areas: for example, in increased use of single-use plastics and discouragement of shared transport. 
 
-  recognises that as a major investor in many hundreds of listed companies, the Highland Council Pension Fund has the responsibility and capacity to be an active shareholder, challenging the management teams of those companies invested in to act in ethical and responsible manner in all their dealings, not least in how they respond to climate change 
 
-  notes that successful climate action may lead the Fund to invest in businesses that are fostering rapid change, some of whom may be significant carbon emitters initially 
 
-  notes that the Highland Council Pension Committee must have regard to the Council's fiduciary duty as administering authority for the Pension Fund and recognises that this duty is consistent with selecting investments according to ethical, environmental, social and governance criteria as well as financial return.  
 
-  welcomes the arrangement in September of workshops to develop and publish the Responsible Investing Policy Statement proposed in the Statement of Investment Principles adopted by the Pension Committee on 18 March 2021. 

 -  recognises that the Pension Fund started 2021 with a very low greenhouse gas intensity from its shareholdings, approximately half that of an average global investment portfolio 
 
-  notes that the Fund has, in the course of 2021, now transitioned circa half of its actively managed shareholdings to be run on a Paris Accord-Aligned basis, which has reduced the already low greenhouse gas intensity even further 
 
-  recognises that the Pension Fund’s Paris Accord-Aligned portfolio will not rest at that already low level and will deliver an approximate 7% year-on-year reduction in greenhouse gas intensity from its investments in line with the target reductions set out in by the IPCC in 2018 in order to achieve a rapid pathway to net-zero and limit global warming to 1.5% by 2050. 


Notes on amendments from two websites on meeting procedure

1. 'Amendments cannot amount to a direct negative of a motion or nullify the motion.

2. 'You can not allow an amendment that completely distorts or changes the meaning of the original motion.'

Text of a press release  to be issued by the divestment campaign.

FoES notes on what was said at the meeting

HC webcast of the meeting    (Pippa Hadley proposes the motion at about 3:10:00 on the timer, or click on item 10ii on the agenda and scroll back up to the video).


September 2021

Divestment motion to Highland Council

At a meeting of the Council on 9 September Scottish Green Party councillor Pippa Hadley will propose a motion on behalf of the joint Fossil-Free Highlands / Highland Charter for Responsible Investment campaign, urging the Pensions Committee to divest from fossil fuels, armaments and other unethical investments.

The motion has evolved through extensive discussion within the campaign over several weeks, and the final text, somewhat watered down from a previous more forceful version, reads as follows
 

Council:

- recognising the continuing, serious and accelerating changes to the world caused by climate change, reaffirms its declaration of a climate and ecological emergency, and renews its commitment to achieving a carbon neutral Highlands by 2025;

- recognising that we live in one world, where local actions have global consequences, and vice versa, affirms its commitment to sustainable development and environmental protection, and acknowledges its role in upholding human rights and international law; 

- notes that the Highland Council Pensions Committee must have regard to the Council's fiduciary duty as administering authority for the pension fund, recognises that this duty is consistent with selecting investments according to ethical, environmental, social and governance criteria as well as financial return, and is concerned that the pension fund currently retains large holdings, worth in excess of £160 million, in companies, including fossil fuel and armaments companies, that fail to meet the environmental, social and governance standards expected of a responsible local authority pension fund; 

- welcomes the arrangement in September of the workshops to develop and publish the Responsible Investing Policy Statement proposed in the Statement of Investment Principles adopted by the Pension Committee on 18 March 2021 and as part of its consideration encourages Pensions Committee to have regard to the principles set out in the Highland Charter for Responsible Investment and to consider making a commitment prior to COP26, to divestment from fossil fuels, armaments and other environmentally and socially harmful products and activities as soon as possible.


There will be a demonstration in support of the motion at Highland Council Headquarters in Glenurquhart Road at 8.30 on 9 September, though it is not known how many councillors will be attending the meeting in person.

FoES/Fossil-Free Highlands have set up an 'e-action' web page to enable anyone concerned about this issue to email their local councillors to urge them to support the motion.  The appropriate councillors are identified automatically from your postcode, and a (rather long-winded) email text is provided.  This can be amended separately for each councillor, or you can replace it completely with your own text.

We believe that councillors may not even bother to read the long email provided, and suggest that you email your local councillors directly with a brief message asking them to support the motion on 9 September.  The Black Isle councillors and their email addresses are

Gordon Adam         gordon.adam.cllr@highland.gov.uk

Jennifer Barclay      jennifer.barclay.cllr@highland.gov.uk

Craig Fraser           Craig.Fraser.cllr@highland.gov.uk

Highland Council    Pensions Committee and Board members

Summary of unethical investments in Highland Council Pension Fund

Detailed background report by Highland Palestine / Charter for Responsible Investment on local authority pension funds in Scotland.

-------------------------

July 2021

New impetus for divestment campaign - Fossil Free Highlands joins Highland Charter

A partnership has been established between the campaign for a Highland Charter for Responsible Investment - set up with the original objective of securing the Fund's divestment from US arms manufacturer General Dynamics - and Fossil Free Highlands, part of a Friends of the Earth Scotland campaign to pursuade all Scottish local authorities to divest from fossil fuels.  

A decision to work together was taken at the first meeting of Fossil Free Highlands in June, and the first joint meeting will be held on 14 July.

Fossil Free Highlands has prepared a divestment strategy document which includes links to a UK report and a Scotland briefing on the topic of  'Divesting to Protect Our Pensions and the Planet', and to a blog summarising the situation in Scotland and asking readers to write to their local councillors.

Some success in the campaign is shown by news of a motion urging divestment passed by Glasgow City Council in April, and that the North East Scotland Pension Fund divested from 23 armaments companies in December 2020.

FoE's wide-ranging Fossil Free Scotland campaign

Read more below about the development of the divestment campaign.

-------------------------

May 2021

Committe Chair admits unethical investments

In correspondence with the Highland Charter for Responsible Investment campaign, Councillor Ben Thompson, Chair of the HCPF Investment sub-Committee, has admitted that its fund managers  'invest in the arms industry, tobacco,  gambling, cheap fast food, agrochemicals etc – (unfortunately)'.  Councillor Thompson, who has previously previously claimed the fund 'takes environmental, social and governance issues seriously’, says the reason is that companies in these sectors pay a high and rising dividend every year, which is necessary to enable the pension fund to beat inflation and maintain its value.

Read a summary of the correspondence

-------------------------

April 2021

Glasgow Council backs fossil fuel divestment

Highland Charter for Responsible Investment has emailed

Yesterday (Thursday 1st April), Glasgow City Council  endorsed a plan to end their £500 million investment in fossil fuels.  The motion was approved by a full meeting of Glasgow City Council  by a margin of 69 votes to 4 against.  The motion will now go forward to Strathclyde Pension Fund Committee.  Full details can be found in this press release from Friends of the Earth Scotland.

At its meeting on March 18th Highland Council Pension Fund agreed to hold a workshop for members of the committee in order to develop and publish a Responsible Investing Policy Statement.  This was a key recommendation of the Highland Charter for Responsible Investment campaign. 

There’s never been a better time to influence the pension fund’s investment policies.  So, if you would like to seize this opportunity and take an active part as a member of the campaign coordinating group, please send an email to r.i.charter@btinternet.com


The FoE web page has a link to a number of videos and PDF presentations by a range of experts on various aspects of the general topic of 'Scotland's response to the Climate Emergency'.

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Pensions Committee and Board meeting 18 March 2021

This meeting had been the focus of the Highland Charter for Responsible Investment campaign, as one of the items on the agenda was the approval by the Pensions Committee of a new 'Statement of Investment Principles'.  It was always unlikely that the document put before the committee would have been significantly changed as a result of the campaign, and in substance it was very similar to the previous version adopted in 2018; but there were hopeful signs.

A new section 17.2 stated
"With a view to developing and publishing a Responsible Investing Policy Statement that is consistent with the Fund’s fiduciary duty, a workshop will be held for the Pensions Committee members during 2021."

It ought not to be too much to expect that this workshop might finally produce a document containing specific criteria regarding the kinds of companies the Pension Fund will and will not invest in, and that its adoption might be followed by rapid divestment from companies in those sectors declared unacceptable.

At least as significant as this technical proposal was the nature of the discussion which preceded the approval of the Statement of Investment Principles, and it was obvious that the Charter campaign had made a considerable impression on many of the committee members.  Several, including Black Isle councillor Craig Fraser, declared that the Pension Fund's investment policy must take more account of ethical and humanitarian principles; two demanded specifically that the fund divest from General Dynamics; and one asked why the committee should not immediately adopt the Charter for Responsible Investment.  On the other hand one councillor declared that ethical considerations should play no part whatever in the choice of investments, and another accused some of his colleagues of hypocrisy.  In other words, a lively discussion, the like of which has probably not been seen in the Pensions Committee for many years.

You can view a webcast of the meeting  here .  (You can scroll down to go straight to item 5 - Statement of Investment Principles).

HCRI have also produced a  report  and a  transcript  of the meeting, and sent an email in which they report the obvious effect the campaign has already had in influencing the attitudes of councillors towards the Pension Fund's investment policy, and announce their intention to formally constitute the campaign.

We would now like to invite people to come forward to establish a representative entity. If you would like to become an active member of the group, please send an email to  r.i.charter@btinternet.com . 

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Campaign to end Council Pension Fund armaments investments

Local group Highland Palestine has been campaigning since 2018 to persuade Highland Council's Pensions Committee to divest from the Pension Fund's  £6 million holding in US armaments manufacturer General Dynamics.  A statement issued by the group in October 2018 accused General Dynamics of supplying MK-82 and MK-84 bombs used by Israel against the people of Gaza in 2014, of contributing to the war in Yemen by supplying arms to Saudi Arabia, and of being 'complicit in numerous breaches of international law, human rights violations and potential war crimes.'

The response from the Chair of the council's Pension Fund Committee ranged from bland assurances that the committee 'takes the issue of responsible investment very seriously'  to silence, and Highland Palestine concluded that  'there seems to be a general unwillingness on the part of the media and the Council itself to recognise the serious implications for the Council of retaining an investment in General Dynamics.'

In January this hear Highland Palestine broadened their campaign by appealing to a number of local organisations to join a campaign now directed at persuading  Highland Council Pension Fund to adopt a ‘Charter for Responsible Investment’, which includes a commitment to draw up a list of specific criteria defining the types of companies in which the Fund would and would not invest, on ethical grounds.  The particular focus of the campaign is a meeting on 18 March at which Highland Council Pension Fund Committee and Board will be asked to approve a new ‘Statement of Investment Principles', which is required by law to state the extent to which 'environmental, social and governance' (ESG) principles are taken into account in deciding the Fund's investment policy.

In support of their appeal they attached a detailed and well-researched report reviewing the operation of the Scottish Local Government Pension Scheme, the growing movement towards ethical investment, the concept of 'fiduciary duty' and statements of investment principles, and the management of the Highland Council Pension fund.  They also referred to a report that the North East Scotland Pension Fund had shed investments worth almost £30 million previously held in 23 arms companies following a successful campaign similar to theirs, showing 'that it is possible to persuade local authority pension funds to do the right thing.' 

After gaining the support of nearly twenty local organisations, Including TBI, the campaign sent letters, copies of the Charter, and their report to members of the Pensions Committee and Board and all Highland councillors.  In the letter they widened the range of their attack from General Dynamics and armaments, accusing councillors of holding  'at least £140 million in companies that damage the environment, are complicit in war crimes and other violations of human rights, harm people’s health, or otherwise undermine the fabric of society. They include companies engaged in fossil fuel extraction, mining, armaments, nuclear processing, gambling, alcohol and tobacco.'

In the final stage of the campaign the Charter group has asked supporting groups to invite all of their members who feel concern about this issue to send a letter they have drafted to the three councillors most directly involved in the management of the Highland Council Pension Fund, in advance of the Pensions Committee and Board meeting on 18 March.

Highland Palestine statement October 2018

Highland Palestine Pension Funds report

Highland Palestine appeal for support

Charter letter to councillors

Individual support letter

Charter with supporting groups

 

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