Our 2017 annual meeting was held on 1 November 2017 at City Hall in Bradford. A mixture of active, deferred and pensioner members joined us for a comprehensive analysis of our investment and administration performance over the year. Councillor Andrew Thornton, chair of WYPF, chaired the meeting, and delegates heard presentations from director Rodney Barton and fund investment advisers Noel Mills and Mark Stevens. The panel then answered questions from people at the event. You can read the answers we gave below. Question 1 What allocation does the fund have invested in cash and physical gold holdings? Has any consideration been given to increasing them due to “bubbles” in stocks and bonds valuations? Answer The Fund has a widely diversified portfolio to mitigate the risks to any individual investment or class of investments. This topic is discussed with the investment team and the advisors at every meeting of the Investment Advisory Panel. There have been allocations to cash in the last year, but the returns on cash are miniscule. Physical gold provides no yield, and there is a considerable cost to storing it, so it is not considered an appropriate asset for the Fund. Over the five years to March 2017 gold has fallen in value by 25%, while the Fund rose in value by over 55%. Question 2 Isn’t it time we moved our holdings in British American Tobacco to a more ethical company? I assume I don’t need to spell out the harm that tobacco causes. I’d rather my pension providers wasn’t contributing to that harm. Answer: The WYPF has continually reviewed the holding in the tobacco sector for many years. Legal advice, obtained by the Local Government Association, is that the Investment Panel concluded that they should not operate a policy of sector exclusion. The tobacco sector has returned 44% over the past five years against a stock market return of 35%, and provided income of £40m over the same period. In view of these returns, the fund has decided to maintain the shareholding in tobacco, in order to maximise returns and lower the financial burden of pension payments on the employers and Council Tax payers. Question 3 Shell knew about climate change in 1991 but has lobbied successfully to undermine European renewable energy targets and is estimated to have spent $22m in 2015 lobbying against climate policy. How can WYPF justify its trust in this company? Answer: The WYPF has engaged with top management of Royal Dutch Shell for many years. WYPF was a co-filer of a special shareholder resolution at the company AGM in 2015, which was recommended by the company board, and subsequently approved. As a result Shell has put in place new procedures for enhanced reporting to shareholders about the business risks of moving away from fossil fuels. Further engagement with the company is planned, regarding topics such as climate change, carbon emissions and company resilience. The company has proved to be responsive to shareholder engagement in the past, and the WYPF will continue to have such a relationship with Shell in the future. Question 4 WYPF has committed via its new Investment Strategy Statement to reduce the carbon exposure of the equity portfolio. Please could the Fund set out by how much and by when it will reduce its carbon exposure; and will the Fund ensure this forward plan is compatible with the Paris Climate Agreement’s global warming limits? Answer: The WYPF is currently in the process of measuring carbon exposure, and will be reporting this measurement on an annual basis in the future. The Fund aims to reduce carbon exposure over time, although no target or time limit has been set, as the situation and alternative investment opportunities are changing all the time. The fund actively invests in clean power generation such as wind, solar and tidal energy, and has been increasing investments in this area for around 15 years. Question 5 The pooling of Local Government Pension Scheme funds has been timetabled for 2018. What plans exist to ensure there are low carbon funds and strong responsible investment policies in place which build on the work already taking place? Answer: The responsibility for investment policy remains with the individual funds, so there will be no change to the policies in place as a result of pooling. The Northern Pool is being set up with strong governance arrangements which will allow the participating funds to hold the pool to account for delivering the responsible investment policies they have set. Question 6 At last year’s annual meeting, members were not invited to ask their own questions in person, this year, there is an obvious scaling back on the size of the annual meeting. These two changes seem to be a disincentive to members asking questions. In view of the reckless, irresponsible behaviour of individuals both in the UK & US, which lead to the last recession, shouldn’t WYPF be playing it’s part by encouraging members to attend and ask questions, in order that such behaviour doesn’t happen again? Answer: The members asking questions last year did not identify themselves, or did not wish to ask the question themselves. Numbers attending in recent years have fallen, and with the cost pressures in the public sector the Fund concluded that it could no longer justify the expense of hiring a large venue that would not be fully utilised. Question 7 The Paris Climate Agreement which 168 countries including the UK have ratified has its formal update in 2020. Will WYPF commit to setting a deadline for its engagement with fossil fuel companies, and divest by this date from companies whose business model is not compatible with the Paris Climate goals? Answer: Successful engagement with fossil fuel companies has been carried out for many years and the Fund will continue to engage with these companies in the future. There are no plans to divest from fossil fuel companies, as to do so would mean losing the WYPFs right, as a shareholder, to engage on this issue in the future. The fund has already achieved positive outcomes through shareholder engagement, and will strive for further successful engagement going forward.