Agenda item

This report sets out the Treasury Management Strategy for 2016/17 to 2020/21.  In response to Members’ request at the previous meeting, the report also contains information on the Ethical Investment Policy.  Members are asked to note the issues outlined on ethical investments and consider any recommendations they wish to make to Executive, and to note the Treasury management statement and Prudential indicators for 2016/17 to 2020/21.

Members considered a report which set out the Treasury Management Strategy for 2016/17 to 2020/21.  In response to Members’ requests at the previous meeting, the report also contained information on the Ethical Investment Policy. 

Members were asked to note the issues outlined on ethical investments and consider any recommendations they wished to make to the Executive. 

Officers were thanked for their work in preparing the report.

The following issues were raised:

·        Members were pleased to note that the Council did not have any direct investment with fossil fuel companies. 

·        Members noted that, as the Council only invested in money market funds or directly with banks and building societies, it had very little information as to where these counterparties placed their funds.

·        Some Members supported the inclusion of an ethical investment statement within the Treasury Management Strategy.  Examples were cited of those used by other Authorities.

·        Some Members stated that, in order to make an informed recommendation to Executive, they would require further information on the practical difficulties in implementing such a policy. 

·        Some concerns were raised regarding the additional demands on officer time that would arise in obtaining further information or in implementing such a scheme.

·        Whilst there was general support that the Council should aspire to make ethical investments, some Members stated that the priority should be the security of the investments and achieving value for money.

·        Members noted the practicalities that may arise in setting criteria for ethical investments and the subjective judgements that may arise regarding different investments.

·        A suggestion was put forward that, at an appropriate time, the Council should seek to influence the policy of the North Yorkshire Pension Fund regarding ethical investments.

·        Members noted that there was the option to submit a scrutiny topic on this issue to the Corporate and Scrutiny Management Policy and Scrutiny Committee should they wish this issue to be given greater consideration.

Councillor Lisle proposed and Councillor Dew seconded the following recommendation

“That, in response to the resolution of Full Council, it be noted that the committee had considered the Treasury Management Strategy and the contents of the report, including the information on ethical investments”

On being put to the vote the recommendation was declared lost.

Councillor Kramm proposed and Councillor Gunnell seconded the following recommendations to the Executive

“As part of recommendation (a) to the Audit and Governance Committee, the committee recommends to the Executive:

1. That the Executive adopt an ethical statement within the Council’s Treasury Management Strategy, in particular the following wording or similar:

“The Council will not knowingly invest directly in businesses whose activities and practices pose a risk of serious harm to individuals or groups, or whose activities are inconsistent with the Council’s mission and values. This would include, inter alia, avoiding direct investment in institutions with material links to:

a. Human rights abuse (eg child labour, political oppression)

b. Environmentally harmful activities (eg pollutions, destruction of habitat, fossil fuels)

c. Socially harmful activities (eg tobacco, gambling)”

2. That the Executive include in the reporting requirements an update on available information on the ethical standards of our direct and indirect investment and on the legal boundaries of the influence of Council on its investment choices,

3. That the Executive asks officers of the Treasury to request further information from fund managers of money market funds or banks and building societies about their ethical standards in their Fund Management Strategies and report back for consideration by the end of this year, with consultation through the Audit & Governance Committee

4. That the Executive carries out work to liaise with the Pension Fund Committee of the North Yorkshire Pension Fund in order to discuss the fund's investment policy and strategy as soon as the new pooled structures for Local Government Pension Scheme Fund assets (in line with the guidance of the government) have been clarified and implemented”.

On being put to the vote the recommendations were declared lost.

Councillor Kramm proposed and Councillor Gunnell seconded the following recommendation to the Executive

“That it be recommended that an ethical investment statement be included within the Treasury Management Strategy”

On being put to the vote the recommendation was declared carried.

Councillor Lisle proposed and Councillor Cuthbertson seconded the following additional recommendation to the Executive

“That Executive be recommended to consider what further work was necessary to progress this issue”.

On being put to the vote the recommendation was declared carried.

Officers were asked if consideration had been given to the risks that may arise if the United Kingdom were to leave the European Union.  Officers stated that Capita, who were the Council’s Treasury Management Advisers, would monitor the situation and advise the Council accordingly. It was, however, difficult at this stage to ascertain the impact of such a move.

Resolved:  (i)      That the issues outlined in the report on ethical

 investments be noted.

                   (ii)      That the Treasury Management Strategy

Statement and Prudential Indicators for 2016/17 to 2020/21 be noted.

(iii)     That it be recommended to Executive that that an ethical investment statement be included within the Treasury Management Strategy

(iv)    That it be recommended to Executive that they determine what further work was necessary to progress the issue of ethical investment.

Reasons:    (i) and (ii)   So that those responsible for scrutiny and governance arrangements are properly updated and able to fulfil their responsibilities in scrutinising the strategy and policy

                   (iii) and (iv)To action the Council motion of 8

 October 2015.