Richard Greening LAPFF Executive member Novethic Conference, 11 February

LAPFF: who we are Local Authority Pension Fund Forum founded in1991 a voluntary association of 61 UK public sector pension funds with combined assets of approximately £150 billion 2

LAPFF: action on climate change 2001: focus on FTSE 100 corporate carbon reporting : wrote to companies with poor disclosure 2004: attended a number of AGMs. All companies committed to look at reporting. 3

LAPFF: approach 2004, adoption of a sector by sector approach. 2005: engagement with the oil and gas sector Subsequent engagement with food & drink and transport sectors 4

LAPFF: policy 2007: push for tougher carbon targets and mandatory disclosure 2010: Trustee Guide and Statement on Climate Change ‘Members interested in investment opportunities afforded by a low-carbon future which increase diversification and provide long-term returns’ 5

The Scale of the Problem Key issue for oil & gas companies is stranded assets To stay within 2ºC means stabilising CO 2 e at 450 ppm Only 1/5 of current fossil fuel reserves of global publicly listed companies can be used to remain at 450 ppm This presents a major challenge to the business models of such companies and the board’s strategic focus. 6

Collaboration Powerful tool to share resources and influence Member of Investor Network on Climate Risk (INCR) and signatory to Carbon Disclosure Project (CDP) ‘Investor Coalition; engagement, AGM attendance By 2014, all companies had reached an ‘A’ or ‘B’ band 7

Investor coalition Investor coalition decided to focus on two highest carbon emitters in the UK, Shell and BP Met with both company chairmen to discuss ‘supportive but stretching’ resolutions Resolutions filed in Dec/Jan by coalition supported by an international group of institutional investors 8

Shareholder resolutions ongoing operational emissions management asset portfolio resilience to the IEA scenarios low-carbon energy R&D and investment strategies relevant strategic KPIs and executive incentives public policy positions relating to climate change. 9 Resolutions ask for annual reporting from 2016 to include further information on:

Shell 13 LAPFF member funds co-filed the resolution Investor coalition included the Church Investors Group and Rathbone Greenbank. The Environment Agency also co-filed. Overseas investors included Ilmarinen from Finland; three Swedish national pension funds, US and Canadian funds 10

BP Chairman could see it was a ‘friendly resolution’ In January, 11 LAPFF member funds co-filed the resolution Same UK co-filers in the main, overseas filers included Local Government Super (Australia) 11

Company responses End Jan/early Feb, both companies advise support for the resolution A first for a shareholder resolution of this kind Emphasis on constructive nature of engagement Large international institutional co-filing group, support from other funds, press attention, peer position 12

Total LAPFF has engaged with Total since 2008, most recently in January of this year. Climate change has been a focus Objectives of the Jan meeting were to learn more about plans for UK shale gas investment to clarify how climate change considerations influence the Company’s business strategy Private & Confidential13

Investment Risk 14 “Smart investors can see that investing in companies that rely solely or heavily on constantly replenishing reserves of fossil fuels is becoming a very risky decision”. Professor Lord Stern