Agenda item

4.1  Rachel Cowburn introduced the report providing an update from the London Collective Investment Vehicle (LCIV) on progress to date and future planning.  Representatives from LCIV would provide an update on the company’s recent personnel changes and its current work programme including the development of its approach to Responsible Investment.

4.2  Mike O’Donnell, CEO and Kevin Cullen from London CIV provided an update as follows:

·  London CIV update

-  £18bn of assets within its oversight

-  Over 50% of London’s assets are now pooled

-  There are 14 active sub-funds

-  The CEO and CIO were appointed and staff increased by over 65% in the previous year

-  An overview of London CIV from 2015 to 2019

·  Pooling landscape

-  London pooling landscape

·  Governance and oversight

-  Governance structure of London CIV: Shareholders Committee; Shareholders General Meeting

-  Oversight of LCIV:

Independent oversight – Board

External independent oversight – FCA; Depositary; and auditors

Government oversight - MHCLG

·  Fund range

-  Current fund offering

-  Provisional Fund Launch Plan

·  Hackney LCIV portfolio

-  LCIV sustainable Equity Fund £207.7m

4.3  Mr Cullen advised that the core, private debt and infrastructure sub-funds would be launched soon and CIV would now be focusing on infrastructure.

4.4  Mr Johnston enquired whether LCIV’s findings of its 12 month review would be available to the London boroughs.  Mr O’Donnell confirmed that the findings would be shared with other London boroughs.

4.5  Councillor Adams asked how London CIV intended to restore trust in the organisation. Mr O’Donnell stated that senior management were working hard attending meetings to engage and build good relationships with the London boroughs.  LCIV would be identifying key challenges and engaging with boroughs to ensure its products were fit for purpose and met their investment requirements.

4.6  Councillor Hayhurst asked if there was any evidence of LCIV performance and how it met London Local Authorities pooling requirement.  Mr O’Donnell replied that LCIV’s successful performance could be measured through its cost savings and the launching of a project concentrating on enhanced cost efficiencies including transition costs and higher returns through different investment opportunities.  The LCIV was working with London local authorities to identify their investment requirements and deliver specific funds to meet these needs such as a low carbon fund.  In future LCIV would be reviewing its asset allocation and working with London authorities on providing further sub-funds and reviewing the pooling strategy 

4.7  Ms Cowburn enquired if the pool had an overarching transition strategy.  Mr Cullen indicated that plans were in progress regarding a transition management strategy and that one borough had yet to sign the business purpose letter.

4.8  Mr Malins-Smith asked if Hackney was represented within the London CIV’s governance structure and the Shareholder’s Committee.  Mr Cullen confirmed that the Council’s Director of Finance and Corporate Resources was a Treasurer Observer on the London CIV Board and fully participated in its work.  The Board reported to the Shareholder Committee, which met quarterly.

4.9  Councillor Rennison enquired how London CIV was complying with responsible investment, in terms of voting rights. Mr O’Donnell stated that Fund Managers currently voted in line with the voting alerts received from LAPFF but this was a challenge.  Mr Cullen confirmed that work was being undertaken to produce voting and engagement strategies, and that LCIV needed to develop a new approach to voting and its own voting policy to meet the London authorities’ requirement. 

4.10  Mr Malins-Smith sought clarification regarding London CIV employees’ pensions arrangements. Mr O’Donnell indicated that LCIV was currently reviewing it remuneration policy and whether to leave the LGPS or close membership of the scheme to future employees. 

4.11  Councillor Desmond asked about the liquidity of investment funds and enabling Pension Funds to invest in infrastructure.  Mr O’Donnell stated that LCIV was currently reviewing its liquidity policy and that some investment funds such as the property fund had non-liquid assets.  It was clarified that the property fund was high on the LCIV’s agenda and that it had engaged with its existing property fund manager.  However, as many boroughs had already invested in property prior to CIV, a property fund would have to complement existing investment. With regard to infrastructure, a Fund Manager had been selected for this fund, which would be launched in the near future and enable authorities to invest in renewables. 

4.12  The Chair asked about how LCIV intended to address carbon exposure.  Mr O’Donnell stated that many boroughs were measuring carbon exposure and committing to low carbon emissions. LCIV would be addressing this issue when the organisation’s resources were in place and ensure that relevant investment funds were available.

RESOLVED to note the report