Minutes:
The Chairman thanked Mike O’Donnell and Kevin Cullen of the London CIV for agreeing to attend the Pensions Committee meeting.
Members were shown a presentation by the London CIV (LCIV) which covered a LCIV update, the current and future fund offering, LCIV Governance and the LBH LCIV portfolio. Key points highlighted included:
· A LCIV ESG and Strategy Forum and Q3 LLA Investment Forum was recently held which was a useful and well-received event. ESG and climate change were now key LCIV priorities;
· LCIV Infrastructure Fund – first close was 31 October with five LLAs committed;
· The MHCLG Progress Report Submission indicated an increase of 20% in the pooling level to 68% by 2023 (from 48% as at March 2019);
· Two new Client Relations Managers had been appointed – Harry Lamprinopoulos and Silvia Knott-Martin.
It was reported that LCIV challenges included:
· 2019/20 growth in assets was broadly flat;
· Rate of pooling had been declining;
· Triennial valuations were impacting the pace of pooling;
· LLAs were yet to focus on mandate proposals instead of manager selection;
· The LCIV Global Equity Core Fund had been launched but not yet seeded;
· LCIV Business Purpose change had yet to be approved;
· The search for a new interim CIO and permanent CIO was under way – unfortunately the CIO recruited in September had only remained in post for three weeks.
The current and future fund offerings were outlined to Pensions Committee Members. In terms of the London CIV Strategy, there was a need to agree what management should look like to enable the LCIV to approach the market with a firm idea of what was required and to enable them to achieve keen pricing. Members were informed that the first flows of the Infrastructure Funds were lined up to include six boroughs with £399m of investment – this was a positive development.
Members requested further clarification regarding the matter of Governance as it was perceived that more could be done in relation to this. It was noted that one London borough had not yet invested anything in the LCIV. It was confirmed that there had been some delay due to the difficulties in recruiting and retaining a CIO. Moreover, the workings of the Shareholder Committee needed to be explored further. New Governance arrangements were being considered at present and a review was due to commence very shortly. It was confirmed that all feedback was useful and welcomed. Responses were due by the end of November; subsequently a decision would be taken regarding the next steps – a workshop on Governance was being considered once survey results were received. The Pensions Committee was advised that the new Governance arrangements were widely considered preferable to the Joint Committee Structure but some further tweaking was required. It was recognised that there were issues to be addressed in relation to ESG and fund managers. Some London boroughs had indicated that they preferred an engagement route with direct contact with fund managers. It was hoped that annual meetings between investors and fund managers could be arranged in the future; however, it was acknowledged that this was challenging since there were 32 London boroughs in total with very diverse needs. The Pensions Committee was advised that a single approach to voting across all 32 boroughs was deemed to be preferable as it would have more impact. Such matters would be considered further on completion of the stock take.
Members suggested that, given the large number of diverse London boroughs, one option would be for like-minded boroughs to form natural groupings. It was reported that some boroughs appeared reluctant to be involved with the LCIV. Members expressed concern regarding the apparent slow-progress being made; it was acknowledged that progress had been slower than the Government would like and the challenges faced in London were particularly acute. It was recognised that greater collaboration and pooling across London were desirable but progress to date and the slow pace of change were a concern. The Pensions Committee was informed that some benefits had already been delivered by the LCIV and it was anticipated that these would increase in the future.
RESOLVED That: the content of the presentation be noted.