Agenda item

The Committee received a summary and update on the Fund’s investments with Border to Coast.

The presentation provided information on the following:

•         Responsible Investment and Border to Coast

•         Policy Review

Members heard that Border to Coast had assessed the three policies listed below against other leading pension funds globally and this year there had not been any substantial changes or suggestions on how the fund should develop the policies.

•         Responsible Investment Policy

•         Corporate Governance and Voting Guidelines

•         Climate Change Policy

Border to Coast was transitioning its Responsible Investment (RI) and Climate Change policies to a three-year formal review cycle (starting 2026-29) to promote more stable governance. While yearly updates would continue for voting guidelines, the strategy focused on long-term themes (2022-2025) including climate change, biodiversity, and social issues via partners like Robeco. 

A Member raised that the policies in discussion conflicted with Donald Trump’s policies and suggested that this may cause the US to penalise these companies. It was queried whether this would affect the Fund.

A representative from Border to Coast advised that their approach to responsible investment was focussed on clear investment rationale and it was important that companies evidenced how they managed their own risks in the interests of shareholders.

A representative from Border to Coast advised that their approach to responsible investment was focussed on clear investment rationale and it was important that companies evidenced how they managed their own risks in the interests of shareholders.

It was also raised by Members that investment in tobacco products raised significant ethical considerations and a Member queried whether Border to Coast had considered including tobacco products in their exclusions from investment.

A representative from Border to Coast advised that investments were only made when there was a clear investment rationale. The partnership voted on shareholder proposals to drive change, including those related to ethical and ESG issues. The UK fund had a 4.9% exposure to tobacco products.

Another Member raised concern that Border to Coast had transitioned to a three-year review cycle due to the rate that Climate Change was happening. They also highlighted that concerns around tobacco investment had been raised previously at Committee meetings and there had been no feedback or change implemented. It was requested that Border to Coast engage with other Pension Fund Committees to gather views on tobacco investment and feed back to the Teesside Pension Fund Committee.

An Independent Advisor queried whether Border to Coast were prepared to engage more meaningfully with companies. It was suggested that Border to Coast engage more closely with all parties around tobacco investment and complete a 360-degree review.

Members heard that Border to Coast committed significant resources to engagement through stewardship, collaboration, active ownership etc. The suggestion of a review would be taken away and discussed internally.

It was also agreed that the concerns raised around tobacco investment would be delegated to the Border to Coast Board via the Non-Executive Director, Councillor D Coupe.

ORDERED that:

1.      The information provided was received and noted.

2.      Border to Coast look into engaging with other Pension Committees regarding investment in tobacco products and feed back to the Committee.

3.      The Non-Executive Director of Border to Coast Pensions Partnership LTD to feedback concerns around tobacco investment to the Border to Coast Board.