Agenda and minutes

The Chief Executive reported that no questions had been received under Standing Order 35.

There were no urgent items for consideration.

The Chairman invited members who wished to do so to declare any interest in respect of items on the agenda for the meeting.

No declarations were made.

It was noted that the next meeting would be held on 12 October 2022 at 10.00am

The Subcommittee considered a report by the Director of Corporate Resources which provided an update on the strategic asset allocation and cash deployment plans. A copy of the report marked ‘Agenda Item 7’ is filed with these minutes.

RESOLVED:

That the report be noted.

The public are likely to be excluded during consideration of the remaining items in accordance with Section 100(A)(4) of the Local Government Act 1972 (Exempt Information):

RESOLVED

That under Section 100(A) of the Local Government Act 1972 the public be

excluded from the meeting for the remaining items of business on the grounds

that they involve the likely disclosure of exempt information as defined in Part 1 of Schedule 12(A) of the Act.

Representatives from Investment Managers Quinbrook and Stafford Capital provide a presentation as part of this item. Copies of the slides are attached. 

The Subcommittee considered a report by the Director of Corporate Resources which provided members with information in respect of the infrastructure portfolio review and proposed investments. A copy of the report is filed with these minutes marked ‘10’.

The note was not for publication by virtue of Paragraphs 3 and 10 of Part 1 of Schedule 12(A) of the Local Government Act 1972

Representatives from Hymans Robertson set out their review of the Fund’s infrastructure portfolio, and recommendations that had arisen.

[At this point representatives from Quinbrook Investment Managers joined the meeting]

Representatives from Quinbrook presented to the Subcommittee on the Net Zero Power fund, a fund that focused on renewables

Arising from the discussion the following points were noted:-

i)     Quinbrook demonstrated their strong track record with Environmental, Social and Governance (ESG) factors. Having achieved a A+ United Nations Principles for Responsible Investment (UNPRI) ESG rating and awarded 2021 ESG investment fund of the year, alongside alignment with Article 9 of the Sustainable Finance Disclosure Regulations.

ii)    Quinbrook could provide quarterly updates on carbon metrics, including Scope 1, 2 and 3. The Investment Manager was working with KPMG to identify gaps in its reporting to be confident of end impact. Members were assured that a third party audited any carbon metric reporting.

iii)   Quinbrook did not see wind power as value-add for the Net Zero Power fund, due to constraints on ageing, transition, and distribution. Quinbrook cited that it was generally windiest between 9pm and 9am in the morning, where there was lower energy demand. The portfolio preferred solar farms given they could be located closer to where there was demand.

iv)   Quinbrook had teams in each location it invested in and continued to evaluate different types of technology, including the lifecycle of technology which was factored in. 

v)    It was noted Quinbrook also offered a co-investment sleeve with attractive investment costs which the Fund could utilise.

[At this point representatives from Quinbrook left the meeting]

Hymans Robertson introduced the next investment proposal in Stafford Capital’s Carbon Offset Opportunity fund (COOF). The Subcommittee noted the fund presented attractive risk-adjusted returns and net zero benefits.

[At this point representatives from Stafford Capital joined the meeting]

Arising from the discussion the following points were noted:

i)     The fund would be made up of 65% afforestation 15% natural forest reforestation 20% improved forest. Due to the increased demand for carbon credits, it was now profitable to set aside the 15% for natural forests to create wildlife corridors with native species. Investment returns would be achieved through a mixture of carbon credits from stored carbon, and timber harvesting.

ii)    The Committee noted that a carbon credit was a certificate which represents the reduction of emissions by the equivalent of one ton of CO2e. For assets within the COOF to qualify as a verified emissions reduction and be claimed as an offset, stringent rules had to be met. Rules included how the forest would be managed and what the timber was eventually used for to ensure carbon credits claimed were genuine and additional. For example, the timber could not be burnt as biofuel, instead must be used for lumber or furniture.

iii)   In response to a query regarding the risk from fire, wind and disease, Stafford assured the Committee that specialists were appointed to manage key risks to the asset class. Properly managed forests included fire breaks and regular clearance of what accumulated on the forest floor which lowered risk. As a result, tree loss along commercial plantation was very low, in comparison to natural forests.

iv)   In the event of  ...  view the full minutes text for item 46.