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Environment Agency Pension Fund

PRI reporting framework 2020

You are in Strategy and Governance » Governance and human resources

Governance and human resources

SG 07. RI roles and responsibilities

07.1. Indicate the internal and/or external roles used by your organisation, and indicate for each whether they have oversight and/or implementation responsibilities for responsible investment.

Roles

Select from the below internal roles

07.2. For the roles for which you have RI oversight/accountability or implementation responsibilities, indicate how you execute these responsibilities.

We integrate management of Environmental Social and Governance (ESG) issues throughout the investment and funding strategy in our asset allocation.  For pooled assets through Brunel we input to, mandate design, risk management, fund manager appointment and monitoring.  For legacy assets we do this in-house. We also take part incollaborative engagement and transparent reporting.

All the assets of the pension fund are selected by external fund managers. This means that it is our external fund managers who make the detailed decisions in which companies we invest in. This is important in avoiding conflicts of interest for our employers, but also gives us the flexibility to select the best managers for each set of assets. The skills needed to decide environmental and other issues vary from one asset class to another. We place a high importance, and indeed time and energy, in selecting good quality managers who deliver financially and can manage the wide variety of risks that come with making investments.

Our policy approach on ESG and its implementation is reported on a quarterly basis to our pension committee.

 

07.3. Indicate the number of dedicated responsible investment staff your organisation has.

2 Number

07.4. Additional information. [Optional]

Responsible Investment is integrated throughout our team from officers to Committee members. We encourage a broad range of expertise and opinion and will consider all available options.


SG 07 CC. Climate-issues roles and responsibilities

07.5 CC. Indicate the roles in the organisation that have oversight, accountability and/or management responsibilities for climate-related issues.

Board members or trustees

Dedicated responsible investment staff

External managers or service providers

07.6 CC. For board-level roles that have climate-related issue oversight/accountability or implementation responsibilities, indicate how these responsibilities are executed.

Our work on climate change is led at board-level in setting ambitious aims and targets.  Addressing the financial risks from climate change is a constant in our approach and in all Pension Committee meetings. 

The members of the Pension Committee have a very high attendance record and have individualised training plans, which will include the consideration of climate change within investments issues.  Last year as part of the review of our investment strategy, members received training on the climate change scenario analysis undertake by Mercer and the work done by our actuaries to model the impact of climate change on our liabilities.

The Pension Committee consistently challenge all advisers and officers on issues of climate change to ensure that due process and attention is given to this issue by the Fund and by our pool provider Brunel. This also happens at meetings of the Investment sub Committee which will delve down into more detail on climate risks which our portfolio and individual asset classes face.

Every year we report to Committee and externally on our progress in line with our stated aims and targets on climate change. We also report every quarter to Pension Committee and Investment sub Committee on our progress on climate-related initiatives.

Pension Committee members also frequently take part in extra events to further our ambitions to tackle climate change.  As well as speaking at events and attending conferences, the most significant activity last year was attending AGMs to ask questions directly of the Board on climate-related issues. Of 9 AGMs Pensions Committee members took part in 7.

07.8 CC. Indicate how your organisation engages external investment managers and/or service providers on the TCFD recommendations and their implementation.

Specify

          We request our stewardship provider Hermes EOS to specifically address TCFD recommendations and their implementation as part of their engagement with companies invested.
        

SG 08. RI in performance management, reward and/or personal development

08.1. Indicate if your organisation’s performance management, reward and/or personal development processes have a responsible investment element.

Board members/Board of trustees

08.1b. RI in personal development and/or training plan

08.2. Describe any activities undertaken during the reporting year to develop and maintain Board members’ skills and knowledge in relation to responsible investment.

All members have individualised training plans which will help develop their knowledge on all issues, including RI.  Members are able to ask for training on any issue either as an individual or collectively as a committee.  Over the last year, there has been collective training on the following RI issues:

- RI approaches across the world to inform the development of our new Responsible Investment Strategy

- Modelling the impact of climate change on our new Strategic Asset Allocation

- Modelling the impact of climate change on our future liabilities

- RI across our asset classes and in particular:

our targeted opportunities portfolio which focuses on providing seed funding to invest directly in a few outstanding opportunities, which have strong financial and sustainability credentials.

- sustainable multi-asset credit

- Transition Pathway Initiative (TPI)

- Understanding beneficiaries’ views on responsible investment

- Trustee training courses

 

Dedicated responsible investment staff

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

08.3. Provide any additional information on your organisation’s performance management, reward and/or personal development processes in relation to responsible investment.

All officers have a quarterly performance review and responsible investment will be assessed based on individual roles.

Staff with specific responsibility for responsible investment can attend events and seminars on responsible investment or specific sub-topics to further their understanding.

 

08.4. Describe the level of experience board members/trustees/chief-level staff have with incorporating ESG factors into investment decision-making processes.

          We have a very stable membership of our Pension Committee. Members can serve up to 10 years and the average number of years served is currently  3 years. Given we have been applying a responsible investment approach for over 15 years now and that this is a constant issue at each meeting, this should demonstrate the exceedingly high levels of knowledge our trustees have on ESG issues.
        

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