Agenda item

Presentation by London CIV and update

Minutes:

A presentation was delivered by Mike O'Donnell Chief Executive and Will McBean Relationship Manager from the London CIV.

Members asked the following questions:

  1. The government's aim is to ultimately have all Borough funds invested via the CIV. Do you think the legislators have a clear understanding of how long it will take to accomplish this given the time lines they have set through their recent consultation?

 

In response Mike O'Donnell Chief Executive advised that whilst the consultation talked about 95% of new investments being pooled by 2020 , he was not sure if that target is realistic but believes that Boroughs need to be seen to make good progress. He commented that the CIV need to have all required products available to help make the transition happen.

 

2.            Until recently the CIV was heavily city dominated. How will the CIV consult boroughs going forward to ensure that Boroughs needs are taken on board, and that the local government ethos is promoted and maintained?

 

Mike O'Donnell Chief Executive acknowledged this concern. He advised his new role will help to provide balance within the team due to his Local Government background. He also commented on the strong governance within the CIV and highlighted the representation on the  shareholder board and committee.

 

3.            Bearing in mind that each Borough will have different and varying priorities, how do these square with the CIV's own asset allocation priorities for London as a whole?

 

The Committee were advised that the CIV will not have its own asset allocation strategy.  This would be governed by each borough’s strategy. It was acknowledged that there is a challenge in collating the requirements of all boroughs and being able to meet all individual boroughs requirements.

 

4.            The actuaries are currently carrying out the latest triennial review and this may result in amendments to Sutton asset allocation priorities. How can the level of assets pooled through the CIV be increased?  How confident are you that your investment platform will have products which suit our priorities?

 

The committee were advised of the approach of  the CIV Relationship Managers who undertake regular detailed engagement with all London boroughs to capture requirements regarding strategic asset allocation which will aid this process.

 

5.            Regarding demand for popular new CIV products, would investment providers be able to meet demand or does London have too many boroughs to be manageable?

 

The committee were advised that the CIV Relationship managers are making sure there is capacity for the demand and to make sure funds are fit for purpose and set up in a timely manner.

 

6.            Fund performance is key whether through the pool or not. The Pension Pools were created to save on provider management fees but little thought was given to performance and the transition cost of funds into the CIV . How can you square the saving of expenses with performance?

 

The representatives confirmed that pooling has to deliver individual value and boroughs need to be able to assess performance net of fees

 

7.            How will the London CIV ensure that ethical investment principles are enshrined in both its existing and future mandates, particularly in view of the current worldwide focus on climate change?

 

Mike O'Donnell Chief Executive commented that there is an ESG policy agreed but there is more work to be done on engagement and voting. In addition to working with all managers, there is a requirement for the CIV to understand each borough’s own ESG policy and to look at exclusion based mandates.This would need to balance the twin objective of return and ESG requirements. It was indicated that there would need to be an  improvement on CIV ESG reporting.

 

8.            Sutton is currently reviewing its own ESG policy. How will you deal with any differing investment requirements on ESG across London?


Mike O'Donnell Chief Executive responded that there is a lot of common ground and recognised the requirement to have specific funds available to boroughs and also  across London,  and he indicated that boroughs need to get some commonality and collaboration.