INVESTMENT


Ms Creagh’s committee labelled SCPF “engaged”


compared with the “more engaged” ranking of USS, Barclays and HSBC. Joanne Etherton, a climate finance lawyer at ClientEarth, which is assisting Mr Harwood’s claim, says Shell must take climate risk seriously as it is doubly exposed to potential shocks in asset prices. “Obviously for Shell, it’s not only an issue in terms of the investment of the pension fund, but of the strength of the employer covenant. It’s not only the actual investment of the scheme, but the employer who is standing behind it,” she says. Ms Etherton adds: “All pension trustees need to


take time to understand climate change risk. It is a financial matter, therefore it is one that [Shell] should be taking on board and considering it in the context of their scheme.”


Free and fair elections? SCPF’s trustee elections have reignited the debate over whether elections or selection processes deliver the best outcomes for members. Proponents of elections argue for members’


related financial risk led me to submit a formal complaint to the Pensions Ombudsman.” SCPF’s electoral guidelines state that candidates


must ensure “that there are no conflicts of interest in your application (for example, to promote the interests of a particular group of members or to campaign on personal matters)”. Mr Harwood says that, as the legal case was still ongoing, it would be inappropriate to stand for election in this round. SCPF declined to comment.


Taking climate action SCPF has proved receptive to correspondence from Mary Creagh, chair of the cross-party Environmental Audit Committee, urging it to consider climate- related risk, which has been discussed at board level. “The trustee accepts that pension funds are potentially exposed to financial risks through climate change,” former SCPF chairman Clive Mather wrote to Ms Creagh in March 2018. But the fund is yet to sign up to the Task Force


SCPF’S ELECTIONS FOR TWO TRUSTEE DIRECTORS OUT OF AN EIGHT- PERSON BOARD ARE SET TO BEGIN ON OCTOBER 11


on Climate-related Financial Disclosures’ reporting guidelines, falling behind other large schemes such as the Universities Superannuation Scheme, the Barclays Bank UK Retirement Fund, and the HSBC Bank Pension Trust. MrMather continued: “However, we also note that


the [TCFD] study highlights thatmuch of the impact on future assets will come through weaker growth and lower asset returns across the board. This suggests that investorsmay not be able to avoid climate- related risks bymoving out of certain asset classes as a wide range of asset types could be affected.”


democratic representation, whereas proponents of selection argue boards should ensure trustees have the skills to perform a complex role. SCPF takes a hybrid route. After two rounds


of interviews, the existing panel selects eight candidates to be decided via single transferable vote by more than 35,000 members. But, according to Mr Fallowell, this process


excludes candidates who might ruffle feathers. He says selection is rooted in anti-democratic traditions nowbanished to history. “In the late 18th century, British parliaments were often called a “committee of landlords”. You had a situation where parliament was just made up of the same-minded people with same-minded interests. That did not bode well for democracy in this country and, of course, was eventually overthrown in the 19th century,” he says. “It is democratisation that produces knowledge,


provides diversity, and allows the members to be actively involved in one of the few decisions they make within the fund itself, particularity in the defined benefit process.” Ms Peacock agrees: “A good pension scheme is one


that not only invests responsibly, but also listens to members and takes their views into account.” She urges SCPF to consider whether – if the


scheme is serious about the transition to lowcarbon – its criteria for new trustees could be tweaked to encourage a greater diversity of candidates. “If you really want to do it well, you need people on the committee who are committed to it. If you’re not even putting that as something you want [in the criteria], then you’re not making it a priority.”


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PHOTO: ISTOCK


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