The Lincolnshire Council Pension Committee met on Thursday, 16 April 2026, to review market performance and the fund's stewardship activities. The committee received an update on global investment markets for the final quarter of 2025, noting a strong finish to the year for equities despite geopolitical tensions. They also discussed the fund's stewardship activities during the same period, focusing on engagement with companies on environmental, social, and governance (ESG) issues.

Independent Advisor's Market Update Report

Paul Watson, the Independent Advisor, presented a market update for the fourth quarter of 2025. He reported that global equities finished the year strongly, with global indices rising consistently and many reaching record levels. This positive performance was attributed to broad investor confidence. While previous periods had been dominated by large US tech stocks, the gains in 2025 were more widespread across various regions and sectors, with both developed and emerging markets contributing.

However, Mr. Watson highlighted the impact of currency fluctuations, noting that a weaker US dollar led to an approximately 8% reduction in returns for sterling investors. Global bonds delivered modest positive performance, acting as a diversifier in a low-rate environment. Precious and industrial metals also saw a rise, driven by safe-haven demand.

Looking at performance so far in 2026, Mr. Watson described a volatile period for equity and bond markets, primarily due to geopolitical tensions. He noted that markets performed surprisingly strongly in the first two months but receded in March due to a more realistic assessment of the threats to inflation, particularly from the conflict in Iran. This conflict impacted oil supplies and led to a significant rise in Brent crude prices, which in turn is expected to increase inflation due to higher energy costs. In response, central banks have paused expected rate reductions, and markets are now anticipating rate rises to manage inflation. Consequently, the cost of US and UK government borrowing has increased, with the 10-year gilt yield reaching its highest point since 2008.

Stewardship Update Report

Claire Machej, Accounting, Investment and Governance Manager, presented the Stewardship Update Report, detailing the fund's stewardship activity for the third quarter of the financial year 2025/26 (October to December 2025). The report highlighted the fund's engagement with various stakeholders, including the Local Authority Pension Fund Forum (LAPFF), Border to Coast Pensions Partnership, and other fund managers, to ensure investments are well-managed and performing as expected.

Key activities from LAPFF included issuing climate transition plan letters to FTSE 100 companies and assessing the commercialisation of low and no-carbon steel production. LAPFF also engaged with companies operating in Conflict-Affected and High-Risk Areas (CAHRAs), issuing a voting alert against Microsoft. Councillor Mrs. Jacqueline Brockway inquired about the liability associated with such voting alerts, and it was clarified that these are advisory and not binding. Border to Coast, which manages the fund's voting and engagement, considers these alerts alongside advice from its own managers, such as Robeco, before making decisions.

Robeco's engagement activity was also discussed, with a focus on how they measure success. It was explained that success is not solely defined by achieving a specific task but also by establishing meaningful conversations and relationships with senior executives, even if immediate changes are not made. Councillor Martin John Hill OBE raised a question regarding Border to Coast's voting against management recommendations for BP, questioning the rationale given the company's strategic shifts. It was agreed that Border to Coast would provide further explanation on their voting intentions for the upcoming AGM season.

The report also covered voting activity across Border to Coast's equity sub-funds, noting instances where votes were cast against management recommendations. Environmental, Social, and Governance (ESG) ratings for the fund's holdings were also presented, showing modest increases in ESG scores for Global Equity Alpha and Overseas Developed Markets Equity. Finally, the report confirmed that the fund had successfully submitted its report to the Financial Reporting Council (FRC) and remained a signatory to the Stewardship Code.

Consideration of Exempt Information

The committee moved to consider exempt information for agenda items 7 and 8, as these were deemed to involve the likely disclosure of exempt information under the Local Government Act 1972. The press and public were excluded from this part of the meeting.

During the exempt session, the committee approved proposed changes to the Shareholders' Agreement and the Inter-Authority Agreement for Border to Coast Pensions Partnership.

Training Session

The committee received a training session on Cyber Security from Elizabeth Boardall, Chief Technology, Projects and Communications Officer at West Yorkshire Pension Fund.