Minutes:
The Committee received a presentation from Baillie Gifford representatives, Tim Gooding, Global Equities Specialist, and Chris Murphy, Client Service Director providing an investment update on the London Borough of Bromley Pension Fund.
In considering the presentation, a Member queried why Baillie Gifford had not met its performance target over the five-year rolling period. The Global Equities Specialist responded that the difficult financial climate of late-2021 and 2022 period had impacted performance in the short term, but that Baillie Gifford had every confidence in the strength of its investment portfolio in the medium to long-term. The Member asked why Netflix was still categorised as a ‘Disrupter’ investment and the Global Equities Specialist clarified that this reflected the flexibility of the company’s business model including the recent introduction of Netflix Ad-Supported Plans that had attracted new subscribers and the significant potential for growth in markets such as China. Tesla Inc was also categorised as a ‘Disrupter’ as it had similar resilience within its business model and was well-placed to benefit from its innovation in new areas including grid-level battery storage. With regard to complete sales, the Global Equities Specialist advised that Baillie Gifford worked closely with the companies in which it invested, including promoting environmental social governance with a particular emphasis on strong governance and that complete sales were made for a number of reasons including performance and governance.
In response to a question from a Member about the United States, the Global Equities Specialist confirmed that significant investment opportunities were anticipated as a result of the passing of the Inflation Reduction Act, Infrastructure Investment and Jobs Act and the Chips and Science Act, including in the development and deployment of clean energy technology and the domestic research and manufacturing of semi-conductors. The Member also asked about the threat to intellectual property at a global-level and the Global Equities Specialist stated that whilst this remained a concern, countries that had previous disregarded intellectual property were now making their own advances. Another Member flagged a concern around ethical investment with Elon Musk, CEO of Tesla Motors choosing to limit Ukraine’s access to satellite services and the Global Equities Specialist advised that the focus of Bailie Gifford was solely in relation to its investment in Tesla Inc. On a similar note, a Member queried the inclusion of Rio Tinto in the Investment Portfolio as this company had been criticised for its destruction of aboriginal rock shelters as well as for its workplace culture. The Global Equities Specialist confirmed that Baillie Gifford continued to engage closely with Rio Tinto regarding its governance and that the company had accepted all recommendations of the external review of its workplace culture. Environmental concerns would be a key area moving forward and Baillie Gifford would be particularly engaging with Rio Tinto around reducing its carbon emissions.
Another Member observed that the value of the fund as of 30 June 2023 was reported differently within the presentation and other sources and underlined the importance of ensuring clarity in financial reporting to support robust decision-making and scrutiny by the Committee.
The Chairman thanked the representatives of Baillie Gifford for their excellent presentation.
RESOLVED: That the presentation from Baillie Gifford be noted.