Agenda item

          The Chair of the Audit & Governance Committee, Councillor Clayden, will present recommendations from the meeting of the Audit & Governance Committee held on 28 February 2023.

          The recommendations for Council to consider will be circulated with the minutes which will be attached separately to this agenda, but relate to:

·       Treasury Management – Strategy Statement and Annual Investment Strategy – the Officer’s report is attached

            The Chair of the Audit & Governance Committee, Councillor Clayden,  presented recommendations from the meeting of the Audit & Governance Committee held on 28 February 2023.

            Councillor Clayden referred Members to the recommendations at Minute 729 [Treasury Management – Strategy Statement and Annual Investment Strategy 2023-2024]. In formally proposing these recommendations, Councillor Clayden confirmed that there was one slight correction that needed to be made which was that Recommendation (4) should have been resolved by the Committee and should not have formed a recommendation to this meeting.  Councillor Clayden confirmed that the minutes would be corrected to reflect this for presentation to the next meeting of the Audit & Governance Committee in the new municipal year. Councillor Chapman seconded the recommendations, as amended.

            The Chair then invited debate.  Those that spoke expressed concern over Environmental, Social and Governance (ESG) issues and the importance that the Council placed on these when placing any investment. There was concern that the Council valued security, liquidity and yields as a priority over the ethical element of an investment. It was appreciated that the Council had many things to consider in looking at its investments, but the idea of yield versus the ethical side of investments were a concern. There was also concern over banks and their investments into fossil fuels and as banks were accelerating those investments in the fossil fuel industry despite making claims and aspirations that they were looking to achieve net zero targets. Although the Council approved the removal of the Banks of Abu Dhabi and Qatar National Bank from its counterparty listings, the Council still had investments with banks that fell within these concerns which was holding the ethical importance part of the investment below the yield. It was felt that the Council should be looking at investments adopting a more equal footing and so a request was made that the voting on Recommendation (1) be taken separately. 

            Other Councillors spoke in support of the statements made. This was because some of the banks that the Council had investments with were still making considerable investments in fossil fuel industries and this contradicted the current ESG guidance for investments. It was hoped that an ethical policy could be developed to investigate this more thoroughly.

            Those speaking against the statements made confirmed that it was critical for the Council to protect its investments by looking at the safety of banks and the quality of returns. It was acknowledged that protecting the environment was very important but so were the Council’s investments, decisions to change investment strategies should not be rushed.

            As seconder of the recommendations, Councillor Chapman referred Councillors to the wording in the report looking at ESG. This made it clear that in decision making for future investments, ethics would be a prime consideration. Councillor Chapman urged Councillors to support the recommendations and he stated that they should not be voted on separately. 

            The Group Head of Finance and Section 151 Officer echoed the comments made by Councillor Chapman and Councillor Gunner who had explained that this was a difficult balancing act for Officers to take. Officers had to comply with the Chartered Institute of Public Finance and Accountancy’s Code of Practice on Treasury Management (CIPFA). Members were urged to take this into consideration when considering the recommendations.

            Councillor Clayden, as proposer of the recommendations, urged Councillors to support them and confirmed that a strategy would be presented to a future meeting of the Audit & Governance Committee. He asked that all the recommendations be taken together.

            The Council

                        RESOLVED – That

(1)           The Treasury Management Strategy Statement for 2023/24 to 2025/26 be approved and adopted; 

(2)          The Annual Investment Strategy for 2023/24 to 2025/26, including the addition of two new counterparties and removal of two, be approved and adopted:

Additions:

Australia and New Zealand Banking Group (ANZ)

National Bank of Canada

Removal:

Qatar National Bank

Abu Dhabi

(3)           The Prudential Indicators within the TMSS and AIS for 2023/24 to 2025/26 as contained in Appendix 1 and the body of the report, be approved;

(During the debate held on this item, Councillor Stanley redeclared his Personal Interest made at the start of the meeting).