Councillor Eric Kerry Chairman of Nottinghamshire Pension Fund Committee explains the challenges of delivering pension fund returns and moving to cleaner and greener investments.
Councillor Eric Kerry , Chairman of Nottinghamshire Pension Fund Committee said:
‘Nottinghamshire Pension Fund members mean a lot to us and I am sure that they are also important to many of our residents. Perhaps you have a relative relying on us to help provide a secure retirement for them?
‘With 145,000 members across multiple Nottinghamshire organisations, including every district and borough council in the county, we have a huge obligation as a pension fund.
‘We must deliver investment returns to pay for our members’ pensions even as the appetite for a cleaner and greener world grows.
‘Nevertheless, our pension fund is not going to be left behind on climate change, we are very much up for the global challenge of transitioning to cleaner and greener investments.
‘Over the last year, Nottinghamshire Pension Fund has implemented a Climate Risk Action Plan, published a TCFD (Taskforce for Climate-related Financial Disclosure) report, a Climate Strategy and Climate Stewardship Plan and through its partners continues to engage with companies to ensure that they implement Paris Agreement aligned strategies.
‘And the good news is the ongoing work of the fund is clearly delivering results.
‘Our most recent climate risk analysis has indicated Nottinghamshire Pension Fund already has a lower exposure to fossil fuel reserves and a lower carbon footprint than what was the benchmark.
‘One important element of our growing success is increasing our allocation to infrastructure investments, a significant proportion of which are in clean energy, and a gradual reduction in equity investments.
‘Within equity investments the Nottinghamshire Pension Fund is looking at several low carbon and sustainable funds, and over time our fund’s exposure to fossil fuels is likely to reduce because of these asset allocations and diversification decisions.
‘Of course, that future does not just depend on the Nottinghamshire Pension Fund. As the big global corporate organisations transition to net zero, so will our investments as a result, and the more we encourage them to transition, the greater the positive impact of our engagement with them will be.
‘This will naturally take time. But the desire is there, Barclays Bank announcing last year it plans to become a net zero business by 2050 is a key indicator.
‘Another example is a new polymer electrolyte membrane plant to produce green hydrogen being developed by Shell. According to newspaper reports, it will generate 1,300 tonnes per year using renewable energy sources which will be used for fuels with reduced carbon intensity.
‘Our pension fund will be helping to drive this transition and will continue to use our voice as a shareholder to encourage and cajole companies to meet their climate obligations. But this must be done in a responsible, just and well managed way. Simply selling shares to someone else who may not share our beliefs won’t deliver any change.
‘Nottinghamshire Pension Fund is already better positioned than many funds and intends to make further moves to reduce the portfolio’s carbon footprint. Our pension fund can both meet the green challenge and protect members’ interests and that process is already well underway. ‘