Publications
October 24th 2024
Consultation Response on the FRC’s Guidance on the Going Concern Basis of Accounting and Related Reporting
LAPFF provided a consultation response to the Financial Reporting Council (FRC)’s Consultation on the Going Concern Basis of Accounting and Related Reporting, including Solvency and Liquidity Risk.
A copy of the response can be found here.
February 26th 2024
Department for Energy Security and Net Zero Consultation Response
LAPFF responded to the Department for Energy Security and Net Zero consultation on transitional support mechanism for large-scale biomass electricity generators. LAPFF welcomed the opportunity to respond to this consultation. The Forum noted that the economics in the consultation are broadly sound, with there being a higher marginal generation cost of biomass compared to alternative forms of generation, based on the Electricity Generation Costs Report 20236. An intervention that incentivises biomass generation would increase the average marginal generation cost compared to what it would have been without. LAPFF also stressed that some statements in the consultation regarding current biomass use are incorrect from a carbon neutral basis. The consultation appears to address “energy security” but avoids a proper analysis of security of imported wood pellets supply, or environmental sustainability. LAPFF states that intervention support for Drax would not meet net zero policy objectives, there are significant risks to the security of supply, and there would appear to be a hard wired higher electricity cost due to the displacement of cheaper renewables.
September 30th 2023
UN Working Group on Business and Human Rights Consultation Response
LAPFF responded to the UN Working Group on Business and Human Rights Consultation on Investors, ESG, and Human Rights. LAPFF welcomed the opportunity to respond to this consultation. LAPFF called for ESG approaches to be used to re-think business cultures and strategies as opportunities to further efficiency and sustainability. LAPFF also discussed the inadequacy of existing regulations in ensuring that investors receive substantial ESG disclosures from companies, outlined the need for states to align corporate law and human rights to better advance human rights-compatible incentives and policies for investors, and reiterated its experience that investors can gain leverage through collaborative initiatives.
May 12th 2023
UN Working Group on Business and Human Rights Consultation Response
LAPFF responded to the UN Working Group on Business and Human Rights Consultation on extractive industries, just transition, and human rights. LAPFF’s engagement on human rights with both mining companies and affected communities has increased significantly over the past five years, and LAPFF has noted how companies consistently see climate and human rights considerations as competing objectives, mining more to meet ‘sustainability targets’ whilst only moving as quickly on climate as existing regulation allows. LAPFF welcomed the opportunity to respond, appreciating the consultation’s recognition that both state and business actors have imperatives to act effectively on these issues. LAPFF’s response called for mandatory reporting on climate plans to include just transition factors, including stakeholder mapping and free, prior and informed consent (FPIC), and for boards to regularly engage with stakeholders and undertake FPIC in good faith.
March 9th 2023
Transition Plan Taskforce – Consultation Survey
LAPFF responded to a consultation on the Transition Plan Taskforce’s (TPT) disclosure framework. The TPT was established by government to develop a gold standard in climate transition plans. LAPFF’s response welcomed the inclusion of just transition factors but considered there further scope to integrate these factors across the framework. LAPFF’s response stated that if it was to be a gold standard and in line with UK government policy then transition plans would need to be consistent with a 1.5 degree scenario. To ensure consistency and comparability between transition plans, the response also called for a focus on absolute rather than relative emission reductions and greater clarity on definitions of scope 3 emissions and what is meant and included within the ‘value chains’ concept.
November 21st 2022
LAPFF Response to DLUHC consultation: ‘Local Government Pension Scheme (England and Wales): Governance and reporting of climate change risks’
LAPFF responded to the DLUHC consultation on climate change risk governance and reporting, which follows the introduction of similar requirements of funds regulated by DWP. The response stressed LAPFF’s strong and consistent support for the introduction of mandatory carbon emissions and risk reporting and its backing of TCFD reporting. The response, based on existing LAPFF policies, similar consultation responses and the Forum’s Climate Change Investment Policy Framework, stressed the importance of alignment to a 1.5 degree scenario, emphasised the need to integrate the just transition into climate reporting, and requested stakeholders are consulted on any subsequent statutory guidance.
November 16th 2022
LAPFF Response to the CA100+ Net Zero Company Benchmark
October 7th 2022
LAPFF Response to the Financial Reporting Council ‘FRC ARGA Consultation’
Responding to the ‘FRC ARGA Consultation’ LAPFF welcomes the transition of the FRC to the Auditing Reporting and Governance Authority (ARGA). LAPFF was the first shareholder organisation to identify that the FRC had been designated a public body in the 1990’s, by the Office of National Statistics by virtue of the Chair being appointed by the Secretary of State. That status was affirmed again on the 2004 reorganisation when the FRC picked up additional functions from accounting institutes. Therefore, the Kingman Review should never have been needed. The FRC’s problems always flowed from its own poor governance. Its status was clear, but the FRC Board, and department for Business, Energy and Industrial Strategy (BEIS) officials had knowingly operated the FRC as a private body, despite its designation by the Office of National Statistics for three decades as a public body.
LAPFF therefore welcomed the conclusions of Sir John Kingman’s subsequent report. One conclusion was that the FRC, in trying to balance various sectional interests, wasn’t serving the public interest. There has also been a consistent problem of having to fact check statements the FRC has made.
July 12th 2022
LAPFF Response to the Transition Plan Taskforce
LAPFF has responded to the Transition Plan Taskforce’s call for evidence on a framework for private sector climate transitions. The principles that LAPFF wish to see embedded throughout this consultation are: ensuring plans are comparable to 1.5°C scenario cover Scopes 1-3 emissions, and include short, medium and long-term targets (with definition of what time periods they cover); that plans focus on actual emission reductions (real zero) rather than offsetting and carbon capture (net zero); that there is external verification of emission numbers and whether numbers aligned with 1.5°C and that the social dimension is included in transition plans, effectively ensuring they are also ‘just’ transition plans. LAPFF’s response draws upon the Forum’s experience of engaging with private sector companies on climate plans and a just transition.
May 27th 2022
LAPFF Response to the US National Action Plan
LAPFF issued a response to the US government’s consultation on its 2016 National Action Plan (NAP) on responsible business conduct (RBC). Among suggestions from LAPFF include a request that the US clarify the extent to which it will use hard law legislative initiatives versus soft law voluntary initiatives to create an enabling environment for RBC. There is also a suggestion to make environment and climate change more integral parts of the NAP; to date, environment has been tangential to the NAP and climate has not featured at all.
May 12th 2022
Ending the sale of new, non-zero emission buses, coaches and minibuses
LAPFF has responded to the Department for Transport’s consultation on ending the sale of new, non-zero emission buses, coaches and minibuses. LAPFF strongly supports ending the sale of new non-zero emission busses, coaches and mini-buses by 2025. The response sets out the view that the switch to electric vehicles should support a fair and just transition to a net zero carbon economy. Government, companies and investors must work together to mitigate any negative impacts and make the most of new opportunities for jobs and growth from electric vehicle manufacturing.
April 25th 2022
Jet Zero: Technical Consultation
The Department for Transport issued the consultation ‘Jet Zero: further technical consultation’ which is intended to inform the government’s strategy for net zero aviation. LAPFF responded to the earlier September 2021 ‘Jet Zero’ consultation. You can view the full response to the earlier consultation here. LAPFF considers that all measures to promote net zero aviation should considered within the context of overall provision of reliable and affordable transport including surface transport. LAPFF supports the government pushing for domestic flights to be replaced by train journeys and for any remaining domestic flights to be provided by electric aircraft. This is in line with measures being taken by Austria, France, the Netherlands and Spain.
February 18th 2022
Committee on Climate Change
LAPFF has responded to the Climate Change Committee’s call for evidence. Following on from its 2020 report ‘Role of Business in Delivering the UK’s Net Zero Ambition’, the Committee is looking to develop a more in-depth study, and has asked for feedback from concerned parties. The Committee aligns itself with the principles that the UK’s carbon ‘budget’ should be met domestically, and not passed by ‘offsetting’ to other nations.
LAPFF has supportively replied to the Carbon Offset call for evidence with this letter, as well as filling in the questionnaire on the Climate Change Committee’s website. You can view our full response here: LAPFF Offset Consultation
September 30th 2021
Response to the FCA, BoE and PRA discussion paper – Diversity and inclusion in the financial sector
The Financial Conduct Authority, Bank of England and Prudential Regulation Authority issued a discussion paper to discuss its capacity of supervising financial market infrastructure firms (FMI). LAPFF has long made the case for diversity in the boardroom, at senior level and throughout the workforce on materiality grounds, supporting the principle of diversity across a range of employment characteristics. LAPFF policy states that board diversity ‘discourages ‘group think’ which is vital if there is to be an effective challenge process. LAPFF is of the view that diversity can be linked to better problem solving, innovation and creative solutions, attracting and retaining better talent, reducing exposure to lawsuits, and better overall performance and decision-making at the strategic level.
September 14th 2021
Response to the Department for Transport Consultation on a new CO₂ emissions regulatory framework
The Department for Transport issued a consultation on a framework for all newly sold road vehicles in the UK. LAPFF supports only part of one of the two proposed metrics which is to deploy the zero-emission vehicle (ZEV) mandate. To maximise zero emission capability, the government should ensure there is a focus on electric drive-train technology for all road vehicles. For cars or vans, the Department for Business, Energy and Industrial Strategy has already recognised that this the lowest cost route to zero emissions. LAPFF also considers that all L-category vehicles should have a ZEV sales mandate by 2025.
September 7th 2021
Response to the Department for Transport ‘Jet Zero’ consultation on the strategy for net zero aviation
The Department for Transport issued a consultation on achieving net zero aviation by 2050 in the UK. LAPFF supports a clear legislative framework for aviation carbon reductions, so that companies can make the necessary decisions and financial commitments. LAPFF considers that the government should take the opportunity to support the development of UK leadership in electric flight, including supporting existing corporate leaders who have committed to electric-only private jet flights from 2025, by proposing a ban on fossil fuel powered private jets from using UK airports from 2025 onwards. In line with measures being taken by France, Austria and Spain, LAPFF supports the government pushing for domestic flights to be replaced by train journeys or for any remaining domestic flights to be electric by 2025. All measures to promote net zero aviation should considered within the context of overall provision of reliable and affordable transport including surface transport.
August 20th 2021
Response to the DfT consultation on when to phase out the sale of new non-zero emission heavy goods vehicles.
The Department for Transport issued a consultation on ending the sale of new non-zero emission heavy goods vehicles in the UK. The Forum considers a phase out date provides regulatory certainty for companies which then allows boards to make timely decisions on technological and manufacturing investments to provide zero-carbon technology. This will provide a necessary foundation for the government to meet its legally binding target on emission reductions. In line with LAPFF’s response to the DfT 2020 consultation on ending the sale of new petrol, diesel and hybrid cars and vans, LAPFF considers the UK government should aim for 2025 for the phase out of all new non-zero emission HGVs.
July 5th 2021
Response to the Department of Business Energy and Industry Strategy on FRC and Audit White Paper
In 2018 LAPFF made a submission to the Financial Reporting Council (“FRC”) dealing with governance of companies which presented serious concerns about the FRC and it’s own governance. That led to a period of circumspection which then led to the Kingman Review. The Kingman Review concluded that the FRC was not fit for purpose and would be replaced by a new body, ‘ARGA’ The Auditing, Reporting and Governance Authority.
This White Paper deals with some of the issues relevant to the transition to ARGA. Some of the issues around accounting and auditing standards have not been addressed and the LAPFF response to the White Paper deals with these.
Some other issues are also covered on the LAPFF website.
June 16th 2021
Response to the DWP’s Call for Evidence: ‘Consideration of social risks and opportunities by occupational pension schemes’
LAPFF responded to the DWP’s consultation on ‘consideration of social risks and opportunities by occupational pension schemes’. Although this consultation does not cover reforms which will affect LGPS funds, as pension regulation and legislation for the LAPFF’s sector tends in the end to mirror those within the purview of DWP the Forum wished to submit a response. The Forum outlined its policy approach to social issues and the ways and themes that LAPFF engages companies on. LAPFF’s response stated that social issues are often overlooked and there was a need for much greater company disclosure.
June 11th 2021
Consultation on aviation tax reform
LAPFF’s response to the government consultation on a proposed reduction to air passenger duty (APD) calls on the Treasury to review the current position of air tickets being VAT free and aviation fuel incurring no duty. In its response LAPFF says a price signal of reducing domestic APD would encourage more flights. This in stark and direct opposition to the government’s own climate change target to reduce emissions by 78% by 2035 over 1990 levels.
February 8th 2021
EU Sustainable Corporate Governance Consultation
The EU has run a public consultation on sustainable corporate governance that ended 8 February. Here is a brief overview of the consultation:
As announced in the European Green Deal and the Commission’s Communication on the (COVID-19) Recovery Plan, it is important that sustainability is further embedded into the corporate governance framework.
Sustainability in corporate governance encompasses encouraging businesses to consider environmental (including climate, biodiversity), social, human and economic impact in their business decisions, and to focus on long-term sustainable value creation rather than short-term financial value.
Competitive sustainability will contribute to the COVID-19 recovery and to the long-term resilience and development of companies.
This public consultation aims to gather data and to collect the views of stakeholders with regard to a possible initiative on sustainable corporate governance. The questions are targeted to provide their views on the most relevant aspects of sustainable corporate governance. More specifically, the consultation aims to:
- Gather the views of stakeholders on the need and objectives for EU intervention as well as different policy options;
- Gather data that can be used to better assess the costs and benefits of different policy options;
- Gather additional knowledge about certain specific issues, in particular as regards national frameworks, enforcement mechanisms and current jurisprudence.
EU action in the area of sustainable corporate governance will complement the objectives of the upcoming Action Plan for the implementation of the European Pillar of Social Rights, to ensure that the transitions towards climate-neutrality and digitalisation are socially sustainable. It will also strengthen the EU’s voice at the global scene and would contribute to the respect of human rights, including labour rights– and corporate social responsibility criteria throughout the value chains of European companies – an objective identified in the joint Communication of the Commission and the High Representative on the Global EU response to COVID-19[9]. This initiative is complementary to the review of the Non-Financial Reporting Directive.
October 5th 2020
Response to the DWP’s consultation on taking action on climate risk
LAPFF responded to the DWP’s consultation on taking action on climate risk. Although this consultation does not cover reforms which will affect LGPS funds, as pension regulation and legislation for the LAPFF’s sector tends in the end to mirror those within the purview of DWP the Forum wished to submit a response. The Forum stated its support for the introduction of mandatory carbon emissions and risk reporting and set out areas which it felt the proposals could be strengthened.
October 5th 2020
Due Diligence on Forest Risk Commodities Consultation
LAPFF responded to a Government consultation on whether it should introduce a new law designed to prevent forests and other natural areas from being converted illegally into agricultural land. The forum encouraged the Government to do so, but highlighted that there could be issues with it applying just to ‘large’ businesses and further encouraged the scope of the legislation to apply further than it appeared to.
September 25th 2020
IIGCC Draft Framework Consultation
LAPFF responded to the IIGCC Paris Aligned Investment Initiative: Net Zero Investment Framework for Consultation. The Forum congratulated the IIGGC on producing the framework document, and made a few general comments aimed strengthening the document.
September 24th 2020
FCA: Proposals to enhance climate-related disclosures by listed issuers and clarification of existing disclosure obligations
LAPFF has submitted a response to the FCA’s consultation on proposals to enhance climate-related disclosures by listed issuers and clarify existing disclosure obligations. The Forum welcomed the proposals but called for a mandatory approach.
September 18th 2020
PRI Human Rights Framework Consultation – LAPFF Response
LAPFF welcomes this framework in highlighting the importance of human rights as a financially material consideration for investors.
September 2nd 2020
LAPFF has written to the BEIS Select Committee, the Secretary of State and the Law Commission regarding the problems with the International Accounting Standards Board consultation on revisions to international standard IAS 1
The LAPFF letter to the FRC of 1 September 2020 has been followed up by three further letters.
LAPFF also makes the point that so-called ‘ investors’ who purport to support the international accounting standards tend to be a less than qualified group that has been cultivated by the standard setting parties, and don’t actually represent investors. LAPFF tends to support the views of more credible real investors such as Warren Buffett and Charlie Munger of Berkshire Hathaway who are openly derisory of the approach the international standards take.
September 1st 2020
LAPFF has written to the Financial Reporting Council on its response to the International Accounting Standards Board consultation on revisions to international standard IAS 1.
The LAPFF letter points out that the purpose of accounts described by IAS1 and agreed by the FRC (to be ‘useful to users’) doesn’t agree to the statutory purpose (which is for capital maintenance), and the wording in IAS1 does not agree to the legislation. The new procedures following Brexit require new standards to be agreed by the Secretary of State and then Parliament.
July 31st 2020
Response to DfT consultation on ending the sale of new petrol, diesel and hybrid cars and vans
The Department for Transport issued a consultation on ending the sale of new petrol, diesel and hybrid cars and vans by 2035. The Forum strongly supports bringing forward the end to the sale of new petrol and diesel cars and vans but calls for an earlier date of 2025 to be set. The Forum also welcomes the inclusion of hybrids in the phase out but considers that a clear strategy and policies are required for all road vehicles, including heavy goods vehicles.
June 23rd 2020
International Accounting Standards IAS 1
LAPFF considers IAS 1 to have serious flaws. Parliament in 1945 and 1962 concluded that ill-informed parties in investment wanted ‘exit values’ rather than costs in accounts, and had to point out that exit values are only relevant when a business is not a going concern and about to be broken up. Unfortunately the International Accounting Standards Board (IASB) by force of presence, rather than force of logic, adopted the model that Parliament ruled out. The IASB has sought to have assets and liabilities at value, similar to the break up basis. The irony, is that makes it more likely that a business will need to be broken up, as the ingredients to show whether a business is funded from profits and properly capitalised are missing.
February 3rd 2020
SEC Request for Comment – Proposed Rule Changes for Filing Shareholder Resolutions
The SEC issued a consultation on proposed changes to the filing thresholds and rules for submitting shareholder resolutions in the US. Overall, LAPFF did not support the proposals as they would make the filing process even more onerous than it already is, and they would discriminate against small shareholders.
SEC Request for Comment – Proposed Rule Changes for Filing Shareholder Resolutions »
January 28th 2020
NZ Climate Reporting Consultation Response
LAPFF has responded to the New Zealand Government consultation on their proposal to mandate companies to report in a consistent and defined manner how climate change impacts their business and investments. LAPFF agrees with the proposals for new mandatory reporting requirements which should be widespread and implemented on a comply or explain basis. LAPFF agrees that the TCFD Framework is currently best practice for climate related decisions and that the adoption of climate related reporting will improve decision making within the companies and make it easier for investors to accurately quantify long term value of the companies in which they invest.
September 17th 2019
Transparency in Supply Chains Consultation
The Government issued a consultation on how to make the supply chain transparency component of the Modern Slavery Act more effective. LAPFF has reviewed the Independent Review and its recommendations for necessary changes to the Modern Slavery Act. Overall, LAPFF is supportive of the Independent Review’s suggestions.
June 3rd 2019
Response to the Independent Review of the Financial Reporting Council
LAPFF has responded to the review on the proposed replacement of the Financial Reporting Council (FRC). LAPFF has had concerns about accounting and audit practices since the banking crisis and has stated for some time that there was leadership failure with the FRC, that the FRC needed to be disbanded and replaced, that the position of standard setting and enforcement should be separated, and that the new body should be constituted by statute and accountable to Parliament. This response aims to outline LAPFF’s position on the recommendations outlined in the Kingman Review.
March 19th 2019
LAPFF Response to the GRI Tax Standard Consultation
LAPFF welcomes this standard and its content as a positive way forward on tax transparency and payments to governments. The Forum’s response focuses on ensuring appropriate accountability structures for corporate tax practices and an alignment with existing ESG standards.
February 5th 2019
Climate Change and Green Finance Submission by Sarasin & Partners LLP and Local Authority Pension Fund Forum
Along with Sarasin and Partners LLP with whom LAPFF submitted this response, the Forum would welcome the FCA, alongside the reconstituted Financial Reporting Council (FRC) 2, confirming the existing requirements for transparent reporting of climate-related risks and providing supportive guidance for how companies should meet their obligations to ensure full disclosure and to support comparability.
August 16th 2018
LAPFF Response to the Kingman Review of the Financial Reporting Council (FRC)
LAPFF ‘s response focuses on incompatible functions of the current FRC structure that need to be recognised when coming up with solutions. The response also suggests that the Parliament must be involved in the outcomes to uphold the public interest.
March 8th 2018
Consulting on a Revised UK Corporate Governance Code
LAPFF’s response focuses on the FRC’s own governance problems and raises the incongruity of the FRC campaigning on the importance of ‘culture’. The response also calls for more legal requirements to ensure that stakeholder voices of all types are taken into consideration, in particular those of employees and consumers, and notes the lack of action on executive pay.
January 31st 2018
Financial Reporting Council consultation – Draft amendments to Guidance on the Strategic report Non-financial reporting
LAPFF has responded to the FRC consultation on draft amendments to Guidance on the Strategic Report Non-financial reporting. The response emphasised that as an investor forum, LAPFF believes that robust rules, application and practice on accounting and financial reporting are essential to safeguard the interests of pension fund beneficiaries.
October 13th 2017
LAPFF Response to UK Listing Authority Consultation CP17/21 ‘ Proposal to create a new premium listing category for sovereign controlled companies
LAPFF welcomes the opportunity to respond to the Consultation. As an investor forum, LAPFF believes that addressing the rules pertinent to the listing regime is essential to safeguard the interests of pension fund beneficiaries.
May 8th 2017
The UK’s listing regime – response to FCA consultation
LAPFF’s response focuses on how to ensure that the UK Listing Regime is fit for purpose and focussed on shareholder and creditor protection, not other market agents’ interests. LAPFF’s response sets out that LAPFF believes that the UK Listing Authority (UKLA), being a unit within the Financial Conduct Authority (FCA), is in the wrong place. LAPFF sets out that there also needs to be clarity as to the investor protection provided by Listing Rules and the investor protection provided by company law.
The current regulatory framework has significant problems, not least due to the Financial Reporting Council (FRC) not dealing with existing company law protections properly.
February 27th 2017
Response to Parker review consultation
LAPFF responded to the UK government commissioned Parker review. The Forum agreed with the recommendations that there needs to be an increase in the ethnic diversity of UK boards, the principles behind that position and the specific targets set to achieve this diversity. The Forum also made suggestions about how it could be strengthened from the investor perspective.