Local Authority Pension Fund Forum - annual report to LGA Board 2024

Lead Member: LAPFF Executive Committee
Lead Officer: Cllr Doug McMurdo, LAPFF Chair

Email: [email protected]
Address: C/O PIRC Ltd, Exchange Tower, 8th Floor, Suite 8.02, 2 Harbour Exchange Square, London E14 9GE
Website: Local Authority Pension Fund Forum

(Funds)

• Avon Pension Fund
• Barking and Dagenham Pension Fund
• Barnet Pension Fund
• Bedfordshire Pension Fund
• Berkshire Pension Fund
• Bexley (London Borough of)
• Brent (London Borough of)
• Cambridgeshire Pension Fund
• Camden Pension Fund
• Cardiff & Glamorgan Pension Fund
• Cheshire Pension Fund
• City of London Corporation Pension Fund
• Clwyd Pension Fund (Flintshire CC)
• Cornwall Pension Fund
• Croydon Pension Fund
• Cumbria Pension Fund
• Derbyshire Pension Fund
• Devon Pension Fund
• Dorset Pension Fund
• Durham Pension Fund
• Dyfed Pension Fund
• Ealing Pension Fund
• East Riding Pension Fund
• East Sussex Pension Fund
• Enfield Pension Fund
• Environment Agency Pension Fund
• Essex Pension Fund
• Falkirk Pension Fund
• Gloucestershire Pension Fund
• Greater Gwent Pension Fund
• Greater Manchester Pension Fund
• Greenwich Pension Fund
• Gwynedd Pension Fund
• Hackney Pension Fund
• Hammersmith and Fulham Pension Fund
• Haringey Pension Fund
• Harrow Pension Fund
• Havering Pension Fund
• Hertfordshire Pension Fund
• Hillingdon Pension Fund
• Hounslow Pension Fund
• Isle of Wight Pension Fund
• Islington Pension Fund
• Kensington and Chelsea (Royal Borough of)
• Kent Pension Fund
• Kingston upon Thames Pension Fund
• Lambeth Pension Fund
• Lancashire County Pension Fund
• Leicestershire Pension Fund
• Lewisham Pension Fund
• Lincolnshire Pension Fund
• London Pension Fund Authority
• Lothian Pension Fund
• Merseyside Pension Fund
• Merton Pension Fund
• Newham Pension Fund
• Norfolk Pension Fund
• North East Scotland Pension Fund
• North Yorkshire Pension Fund
• Northamptonshire Pension Fund
• Nottinghamshire Pension Fund
• Oxfordshire Pension Fund
• Powys Pension Fund
• Redbridge Pension Fund
• Rhondda Cynon Taf Pension Fund
• Scottish Borders Pension Fund
• Shropshire Pension Fund
• Somerset Pension Fund
• South Yorkshire Pension Authority
• Southwark Pension Fund
• Staffordshire Pension Fund
• Strathclyde Pension Fund
• Suffolk Pension Fund
• Surrey Pension Fund
• Sutton Pension Fund
• Swansea Pension Fund
• Teesside Pension Fund
• Tower Hamlets Pension Fund
• Tyne and Wear Pension Fund
• Waltham Forest Pension Fund
• Wandsworth Borough Council Pension Fund
• Warwickshire Pension Fund
• West Midlands Pension Fund
• West Yorkshire Pension Fund
• Westminster Pension Fund
• Wiltshire Pension Fund
• Worcestershire Pension Fund

(Pool Company Members)

• ACCESS Pool
• Border to Coast Pensions Partnership
• LGPS Central
• Local Pensions Partnership
• London CIV
• Northern LGPS
• Wales Pension Partnership

The Local Authority Pension Fund Forum (LAPFF) is the UK’s leading collaborative shareholder engagement group. Formed in 1990, LAPFF brings together 87 public sector pension funds and seven pools from across the UK with combined assets under management of over £350 billion, representing a majority of funds under management by local authorities.

LAPFF exists to promote the investment interests of local authority pension funds in the UK, and to maximise their influence as shareholders to promote corporate responsibility and high standards of corporate governance amongst the companies in which they invest.

LAPFF members meet quarterly to discuss and debate a broad range of investment issues concerned with shareholder responsibilities and engagement activities. During the year, members discuss reports on a wide range of topics, with meetings being serviced by PIRC Limited, as the appointed research and engagement partner to the Forum. Keith Bray, formerly County Treasurer at South Glamorgan County Council and Director of Finance at the City of Cardiff Council, is the LAPFF officer with the role of promoting the work of LAPFF generally and amongst existing and prospective members. Cllr Doug McMurdo of Bedfordshire Pension Fund is the Forum Chair.

LAPFF provides a platform for discussion of investment issues and shareholder engagement for LGPS funds and pool companies. Member investment activities have important implications for beneficiaries, local communities, and the wider economy. The collective influence gained by members collaborating on common concerns has an impact in relation to the companies in which they invest.

From October 2022 to September 2023, LAPFF held 79 engagement meetings across various sectors including energy, technology, and finance. 54 Voting alerts were issued to advocate for improved corporate governance and social responsibility.

Climate change engagements: LAPFF focuses on climate change by working with key companies to drive the energy transition and ensure sustainable practices. As a lead investor in CA100+, LAPFF has pushed National Grid to improve grid connections and transparency in lobbying. It has also scrutinized companies like Shell and Drax about realistic climate plans and reduced fossil fuel reliance. Other engagements on climate change have included housebuilders with  net zero transition pathways and their environmental performance.

Human rights focus: Human rights remained a significant focus for LAPFF, with continued work on the global mining industry. A key engagement piece was shown following LAPFF’s visit to Brazil to address the aftermath of the Brumadinho and Samarco dam disasters, which resulted in LAPFF producing a report on its visit with communities in relation to tailing dam safety. Other engagements include companies in Myanmar, where LAPFF has approached companies like Adidas, H&M, and Tesco to understand their responses to human rights concerns following the military coup. LAPFF is also addressing the human rights impacts of the mining sector, contributing to policy discussions at the UN and OECD, and highlighting the need for better ESG practices. In the context of the Russia-Ukraine conflict, LAPFF engaged Unilever to assess its presence in Russia. Additionally, LAPFF has been involved in the PRI Advance human rights initiative to improve practices in the mining and renewables sectors and collaborated with the Investor Alliance for Human Rights to promote responsible business practices globally.

Water stewardship: LAPFF co-chairs the Valuing Water Finance Initiative (VWFI), aiming to engage companies with significant water footprints to address water as a financial risk. LAPFF met with Burberry, Constellation Brands, and McDonald's to discuss their water stewardship practices, urging them to set targets and disclose water risk assessments. LAPFF's engagements with UK water companies, include Severn Trent, United Utilities, and Northumbrian Water, focused on reducing sewage overflows and improving environmental performance amidst regulatory scrutiny. Ongoing efforts include monitoring progress and ensuring credible plans for water risk management and climate adaptation.

Promoting good governance: LAPFF has concentrated on improving the reliability of accounts, particularly in light of issues with current accounting and auditing standards, and has addressed the climate change aspects of financial reporting. LAPFF has highlighted problems with the Companies Act compliance and the incompatibility of International Accounting Standards with UK law, seeking regulatory reforms. Although a recent regulatory proposal was withdrawn after lobbying, LAPFF remains focused on improving corporate reporting and addressing poor-quality listings on UK capital markets through its Capital Markets Working Group made up of members of the LAPFF Executive. 

LAPFF undertakes activity in stakeholder engagement around company ESG practices. LAPFF also engages with various stakeholder partners, and other investors, in this regard. LAPFF is a member of a number of collaborations, including Climate Action 100+ and Asia Research and Engagement. LAPFF works through ShareAction to engage companies on the Healthy Markets Initiative and contributes to the 30% Investor Club aiming to increase gender parity at board level.

LAPFF continued to extend its reach through regular meetings of the All-Party Parliamentary Group (APPG) on Local Authority Pension Funds. This is chaired by Clive Betts MP, chair of the Departmental Select Committee for Levelling Up, Housing and Communities. LAPFF also continued its programme of fringe meetings during the party-political conference season in 2023 with meetings organised at the Labour, Conservative, and SNP conferences.