Presentation given in November 2015 on the East Sussex County Council Pension Fund. Website with more information: https://esccpensionfund.wordpress.com/

1. Slides to talk given in November 2015

Administered by East Sussex County Council

Value - £2.6 billion (July 2015).

One of around 101 Local Authority Pension Funds – which
worth in total ≈ £231bn and responsible for 4.6 million
employees!

“Ask the average person, who are the owners of the biggest
pools of capital, and they would probably conjure up a mental
picture of a mean-streaked capitalist, wearing braces, a cigar,
and a disregard for whether his profits are derived from the toil
of child labourers in India, or the desecration of the Amazon
rain forest. But the answer is more prosaic. It is public
employees' pension funds and ordinary insurance policy
holders.” Prof. Avinash Persaud

2. Members of the fund 1 (Sept '15)
Conservators of Ashdown
Forest
Crowborough Town Council
Ewhurst Parish Council
Fletching Parish Council
Forest Row Parish Council
Hailsham Town Council
Hartfield Parish Council
Heathfield & Waldron
Parish Council
Hurst Green Parish Council
Lewes Town Council
Maresfield Parish Council
Newhaven Town Council
Newick Parish Council
Peacehaven Town Council
Pett Parish Council
Plumpton Parish Council
Polegate Town Council
Ringmer Parish Council
Scheduled Bodies -
Major Authorities
Brighton and Hove City
Council
East Sussex County
Council
East Sussex Fire &
Rescue Service
Eastbourne Borough
Council
Hastings Borough Council
Lewes District Council
Rother District Council
University of Brighton
Wealden District Council
Other Scheduled Bodies
– mostly
academics/schools
ARK Schools Hastings
Aurora Academies Trust
Beacon Academy
Bexhill Academy
Ringmer Academy
Rye Multi Academies Trust
Seaford Academy
Seahaven Academy
Surrey & Sussex Probation
Board
The Hastings Academies
Trust
The SABDEN Multi
Academy Trust
Torfield & Saxon Mount
Academy Trust
UTC@ Harbourside
White House Academy
William Parker Academy
Parish and Town
Councils
Battle Town Council
Chailey Parish Council
Chiddingly Parish Council
BHCC - Bilingual Primary
School
Brighton Aldridge
Community Academy
Cavendish Academy
City Academy Whitehawk
Diocese of Chichester
Academy Trust
Eastbourne Academy
Eastbourne Homes Ltd
Gildredge House Free
School
Glyne Academy
Hailsham Academy
Hailsham Primary Academy
King Church of England
Free School
Marshlands Academy
Newhaven Primary
Academy
Ore Village Primary
Academy
Pebsham Academy
Portslade Aldridge
Community Academy
Ratton Academy

3. Members of the fund part 2
Rye Town Council
Salehurst & Robertsbridge
Parish Council
Seaford Town Council
Sussex Inshore Fisheries &
Conservation Authority
Telscombe Town Council
Uckfield Town Council
Westham Parish Council
Willingdon & Jevington
Parish Council
Colleges
Bexhill College
Brighton, Hove & Sussex
Sixth Form College
City College,
Brighton Plumpton College
Sussex Coast College
Sussex Downs College
Varndean Sixth Form
College
ESCC - NSL Limited
European Electrique Ltd
May Gurney Ltd
Mears Ltd
MyTime
Wealden Leisure - Portslade
Sports Centre
Wave Leisure Trust Ltd
Wave Leisure - Newhaven
Fort
WDC - ISS Limited
WDC - Kier
WDC - Richardson
WDC - Wealden Leisure
BHCC - Wealden Leisure
White Rock
Community Admission
Bodies (Open) & Pre-
2000 Admission
Bodies (Open)
Amicus Horizon
East Sussex Energy
Infrastructure &
Development
Hastings Business
Operations Limited
(HBOL)
Sussex Housing & Care
Community Admission
Bodies (Closed) &
Pre-2000 Admission
Bodies (Closed)
Brighton Dome & Festival
Limited
Care Quality Commission
De La Warr Pavilion
Charitable Trust
Hove & Portslade CAB
Sussex Archaeological
Society
Sussex County Sports
Other Admission Bodies
Accent Catering Services
Ltd
Amey
BHCC - Peyton and Byrne
Churchill - Cavendish
Churchill Contract Services
Civica ICT - William Parker
Eastbourne Homes - SEILL
Eastbourne Leisure Trust
EBC - Towner
Eden Foodservice
Education Futures Trust
ESCC - Care at Home
ESCC - Churchill
ESCC - Heath Management
Ltd (HML)
ESCC - John O'Connor

4. ESCC Pension Fund Investments
(July 2015) (of £2.6 billion)
53,182,351
355,890,180
563,639,187
729,622,123
234,337,409
174,827,827
296,484,180
61,254,791
Cash/Cash Equivalents
UK Equities/Stocks
Overseas Equities
Unit Trust Equities
Index Linked Bonds (mostly Government)
Fixed Income Unit Trust Bonds
Real Estate Funds
Infrastructure Funds
Other/portfolio Funds
173,506,557

5. Current political make-up of
committee/board

Committee (3/5 Con/UKIP) – meets a few times a year
− Cllr Richard Stogdon (Chairman) (ESCC) (Con)
− Cllr Frank Carstairs (ESCC) (UKIP)
− Cllr Godfrey Daniel (ESCC) (Labour)
− Cllr Bob Standley (ESCC) (Con)
− Cllr David Tutt (ESCC) (Lib Dem)

Board
− Angie Embury – UNISON (Scheme member reps)
− David Zwirek – GMB (Scheme member reps)
− Tony Watson - Pensioners representative (Scheme member reps)
− Sue McHugh - Chief Operating Officer, University of Brighton (Employer reps)
− Cllr. Brian Redman (Con) - Wealden District Council (Employer reps)
− Cllr. Kevin Allen (Labour) - Brighton & Hove City Council (Employer reps)
− Richard Harbord - Independent Chair (Independent member)

6. Who really runs the fund? The
investment managers (paid £11.5m last year)
Fund Managers to be seen
once per year

Longview (Global equities)

Ruffer (Absolute return)

Newton (Absolute return)

Schroder (property)

M&G (bonds)
Managers to be seen once every three years

Adams Street

HarbourVest

Infracapital (M&G Infrastructure)

UBS (Infrastructure)

M&G (Financing Fund)
As necessary

L&G (passive manager)

State Street (passive manager)

Northern Trust (custodian)

7. What kinds of investments - fossil
fuels (July 2015)

According to Fossil Free UK, East Sussex Pension Fund has estimated
£171,846,167 (6.6% of total) in fossil fuel investments
− £52,216,594 in direct holdings in stocks (2%) (e.g. EXXON MOBIL
CORP £3,777,249.56)
− £119,629,572.75 estimated in portfolio funds (4.6%)
− “estimate of direct fossil fuel investments is likely to be an
underestimate” - only used top 200 Coal, Oil, and Gas Companies as
listed in the Carbon Underground 200
− “a figure for indirect fossil fuel investments that is considered to be a
conservative estimate” - due to methodology, difficulty of knowing what
all portfolio funds invest in, used estimates looking at a few funds and
extrapolated
− “we believe that we are underestimating the actual totals of fossil fuel
holdings of LGPS funds.”
− http://gofossilfree.org/uk/pensions/

8. Also invests in tobacco/arms and all
kinds of other companies

Some e.g.'s:

Tobacco
− IMPERIAL TOBACCO £5,811,658.30

Arms
− HONEYWELL INTL £3,125,169.65
− UNITED TECHNOLOGIES CORP £2,779,069.29

9. Thoughts on Pension Fund
investments 1

Aim of fund: “to maximise available funds within an acceptable pattern of risk and
within any statutory limitations imposed on specific investment areas.” (1975) (the
‘fiduciary duty’)

Any attempt of divestment, must understand this as its core purpose. Must show the
long-term profitability of alternative investments - e.g. renewables - not just point out
ethical/moral arguments

The fund currently pursues an “active shareholder” approach – problematic

Internal documents have said to leave “ethics at the door” with investment decisions
(2014)

A recent legal opinion of Nick Giffin QC, requested by the Local Government Pension
Scheme Advisory Board stated that: “the precise choice of investment may be
influenced by wider social, ethical or environmental considerations, so long as that
does not risk material financial detriment to the fund.”

Almost all responsibility outsourced to private pension fund management companies.
Councillors, esp Con/UKIP ones, reluctant to intervene on investment decisions.
Meet the investment managers a few times a year.

10. Thoughts on Pension Fund
investments 2

Some Conservatives more open to hearing arguments, especially
economic ones about “stranded assets” and long-term non-
profitability of fossil fuel investments. Again, need to make the
economic case!

People been trying to change investment practices for well over a
decade to be more 'ethical' (press, letters, politicians). Basically all
have failed.

V. worrying trend – Osborne, Conservative party conference: “We're
going to work with councils to create half a dozen British wealth funds
spread across the country” → internal docs suggest no local input
from local councils on fund manager choice if they get their way.

But local governments have used divestment to take a stand before –
playing a key role in the successful campaign against South African
Apartheid. Change can happen!

11. What have I tried?

Collecting information – through FOI's:
− Minutes from Fund from 1974 to 2012
− Full investments of the Fund for last few years – on whatdotheyknow.com
− Full breakdown of Fund Manager Fees ≈ £8 million a year (2012/13) (now £11.5m!),
salaries/costs for employees working on the Pension Fund as well as for councillors
involved

Going to the meetings – was told would have to leave after 5 minutes! More open now?

Speaking to & lobbying different B&H councillors who were on investment panel. Many of
them well aware of the issues. Now speaking to those on pension board and committee.

Writing letters to all councillors on Pension Fund board and Pension Fund full-time staff.
Last letter read out in their meeting

Writing to Tom Scanlon - Brighton and Hove’s Public Health Director - about tobacco
investments (Kent public health specialist threatened with disciplinary action for raising
their tobacco investments on radio!)

Setting up website – where all of this and more is: esccpensionfund.wordpress.com

12. Why is this important?

In light of massive cuts, pension funds could invest positively in local renewable
energy, infrastructure, affordable housing

There are precedents – Lancashire county council’s pension fund invested £12m in
the UK’s first community-owned solar development in South Oxfordshire. - “There’s
been a lot of discussion about local authority pension funds investing in community
infrastructure. I’m pleased that Lancashire has been able to put this into practice with
this £12m investment. Our first responsibility is to secure the best returns for the
people in our pension fund, but I think many will be interested to know that their
pension investments are helping fund worthwhile and sustainable schemes such as
this one.” County Councillor David Westley, Chair of the Lancashire County Council
Pension Fund

A few funds have - or are looking into – divesting from tobacco

A few local authority funds have – or are looking into – investing in community
renewable energy, affordable housing, etc

Pension funds key actor in propping up current financial corporate capitalist system –
if you believe it can be reformed to be genuinely more sustainable, very important
target