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UK Parliament pension fund to discuss climate risk after Green MP’s letter

Trustee chairman confirms issue will be on agenda at next meeting

The pension fund for the UK Parliament has agreed to discuss climate and carbon risk following a campaign launched by Green MP Caroline Lucas.

Hymans Robertson, investment adviser to the Parliamentary Contributory Pension Fund (PCPF), and the MPs who are trustees of the fund are to meet next month to discuss the integration of climate and carbon risk into its investments – as well as more transparency about its exposure to fossil fuel companies.

Chairman of trustees Brian Donohoe told Responsible Investor that the issue would be on the agenda of the fund’s investment committee’s next meeting on November 10. He said the fund would respond in writing to Lucas, who ignited the debate by writing to Donohoe this week. Her letter was co-signed by 12 other parliamentary figures.

Donohoe had initially said he did not think fossil fuels are an investment that the fund should avoid after being asked for a reaction to Lucas’ letter to him on Tuesday.

Hymans Robertson has been investment adviser to the £487m (€615m) fund since 2008, when it replaced Mercer. The fund has nine fund managers, according to its accounts filed for the year ending March 2013. They are: BlackRock Advisers, PIMCO Europe, Sarasin and Partners, Morgan Stanley Global Property Fund, Standard Life UK Property Fund, BlackRock UK Property Fund, UBS Global Asset Management, Triton Property Fund and the Schroder Exempt Property Unit Trust. RPMI, a subsidiary of the Railway Pensions Trustee Co. (Railpen), handles third party administration.The Government Actuary’s department provides actuarial advice. George Russell, Deputy Government Actuary, told RI that it didn’t have a role in providing investment advice.

The majority of the fund’s assets are invested in equities (UK: 26.4%; overseas: 39.6%). The rest of the portfolio comprises 21.5% in bonds, 10% UK property and 2.5% global property.

Recently, the fund set up an investment sub-committee to look at investment matters in greater detail.

Lucas, who is MP for Brighton Pavilion in southern England, said she looked forward to hearing the fund’s response: “Divestment from fossil fuels is increasingly being seen as a crucial way to safeguard both the environment and economic stability. With Governor of the Bank of England, Mark Carney, publicly calling for the vast majority of oil reserves to be considered ‘unburnable’ if the world is to avoid catastrophic climate change, it’s time for MPs to show some leadership. That’s why I’m calling for the parliamentary pension scheme to divest from fossil fuels and instead support renewables, energy efficiency and other low carbon infrastructure.”

The fund’s trustees include Conservative MP and former minister Peter Lilley, who is Vice-Chairman and Senior Independent Non-Executive Director of oil and gas exploration company Tethys Petroleum and was only one of three MPs to vote against the Climate Change Act, and Conservative MP David Mowat, vice-chair of the All Party Parliamentary Group on Nuclear Energy.