Our 2018 annual meeting was held on 31 October 2018 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 submitted by members. You can read the answers we gave below. Question 1 What advice have you sought on climate risks, and when, and do your mandates and contracts with advisors reflect the necessity to consider climate risks, given that the latest Carbon Tracker predicts global demand for fossil fuels will peak in the mid 2020s? How often are you updating this advice? Answer WYPF is a member of several organisations which provide advice and research on climate change and risks. This advice is received as it is published, and our investment managers take account of this advice as they assess each investment. Question 2 In the light of the recent IPCC report that the planet only has till 2030 to stem catastrophic climate change, what plans does WYPF have to align its portfolio with a 1.5 degree world and divest from fossil fuels? Answer: The Investment Strategy Statement of the West Yorkshire Pension Fund recognises the risks and opportunities associated with climate change, and will seek to measure carbon exposure within the equity portfolio and reduce that exposure over time. The Fund follows a policy of shareholder voting and active shareholder engagement, rather than one of divestment, and is a member of a number of organisations which hold climate change as one of their priorities for engagement with companies. This approach applies shareholder pressure to ensures that companies act to align their business plans with international agreements on climate change. The fund believes that this is responsible stewardship that will have a real impact on emissions, whereas divestment would not. Question 3 What are the current goals of WYPF’s engagement with BP and Shell and other fossil fuel companies? What assessment have WYPF made of these companies’ progress towards those goals? What is WYPF’s planned response if these goals are not met? Answer: The Fund became a signatory to the Climate Action 100+ project at its launch in December 2017. This project will engage with the largest greenhouse gas emitting companies globally, not just the oil and gas companies, and has the backing of institutional investors and assets managers all over the world, with over $31trillion assets under management. This investor action group is one of the largest and most powerful yet, and engagement is stronger and more effective as a result. The engagement process is now underway, and WYPF will gauge the effectiveness of that engagement as time progresses. On the basis of the success with the ‘Aiming for A’ resolutions WYPF has no reason to believe the next stage will not be as effective. In addition, members of the in-house investment team will be attending an ESG Board Engagement Day with Royal Dutch Shell in December 2018. Royal Dutch Shell and BP management have been engaging on a regular and open basis with shareholders in recent years. Both companies are making progress in moving away from oil and gas and towards renewable energy, as their recent investments into solar power and electric vehicle charging show. Question 4 What investments does WYPF have in fracking companies a) in the UK, b) Internationally, how is this compatible with its ESG statements and climate treaties. What options do members have to not have their pension funds invested in fracking companies? Answer: The Fund has no investments in companies involved in fracking in the UK. The Fund does have investments in energy companies globally and monitors these investments using the latest research and advice available. Where risks outweigh likely future returns WYPF will sell investments, as it did some years ago by eliminating investment in pure coal mining companies. WYPF is a defined benefit scheme where all investment risk is carried by the employer and as such individual ‘member options’ within the fund that exclude one or more areas of investment would be incompatible. Question 5 TPlease will the Investment Advisory Panel and the Fund Managers please reconsider Tobacco, and plan to disinvest in this poison? 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 Fund has a Fiduciary Duty which makes it clear that the investments must be made in the best interests of the beneficiaries and not for any wider purpose. The Investment Panel therefore concluded that it should not operate a policy of sector exclusion. The Fund does not therefore exclude any sectors, and takes into account all relevant criteria when making an investment decision. This includes all ethical, environmental and social implications as well as financial. The tobacco sector has returned 38% over the 5 years to March 2018 against the stock market return of 34%, and provided income of £41.2m to pay pensions over the same period. In view of these returns, the fund has decided to maintain the shareholding in tobacco, in order to maximise the returns and minimise the financial burden of pension payments on the employers and council tax payers. Question 6 Will leaving the European Union (Brexit) have any impact on the value of pensions, WYPF in particular? Answer: Pensions paid by the LGPS are set by Government regulation, and will not be affected by Brexit.