Ahead of upcoming UN climate talks in Paris, South Yorkshire has become the first UK local authority pension fund to take firm action on the climate impact of its investments.
The fund has committed to low carbon investment policies that exclude ‘pure’ coal and tar sands companies from its portfolio.
The announcement follows a decision made by the Investment Board at a meeting in September. The fund invests over £317 million in fossil fuels, roughly 5.7% of total investments.
Scottish local government funds have a combined investment of £1,664 million (£1.7 bn) in fossil fuels and have made no public commitment to reduce this stake.
The Strathclyde Pension Fund and Lothian Pension Fund recently published reports concluding that their responsible investment policies were adequately dealing with climate change (1).
Ric Lander, Friends of the Earth Scotland, said:
“World leaders are gathering in Paris to discuss international action on climate change and money is beginning to move away from high-carbon investments across the UK – yet Scottish funds seem to slow to act. South Yorkshire, whilst still having a path to travel to become fossil free, should be applauded for making public their actions to tackle fossil fuels.”
“Scottish pension funds should not remain invested in those companies profiting from changing the climate. At a time when public resources are being squeezed, we can find more socially useful ways of investing this money such as public housing and clean energy.”
Although rejecting calls to divest from all fossil fuels, the South Yorkshire fund acknowledged that ‘there should be a long term tilt towards a low carbon economy within its portfolios’ and ‘agreed to monitor carbon risk.’
Sean Ashton, from Sheffield Climate Alliance, commented:
“Sheffield Climate Alliance are pleased with some of the investment board’s commitments, particularly the agreement to carry out a carbon audit. That being said, we remain disappointed that the board are still pursuing its policy of engagement rather than looking more actively at divestment.”
The decision follows a spate of new divestment commitments in the UK in the run up to the COP21 climate summit, including ten universities, two city councils and the Environment Agency Pension Fund.
Ellen Gibson, from campaigning organisation 350.org, commented:
“This is a step in the right direction for South Yorkshire. In the lead up to the Paris talks, it’s more important than ever that our public institutions take a stand and show their commitment to a low carbon future. Coal and tar sands are some of the dirtiest fuels, however, to prevent dangerous climate change we ultimately must keep 80% of all fossil fuels in the ground. Pension funds should follow the lead of the Environment Agency and South Yorkshire by divesting from coal and tar sands, and dirty energy altogether.”
Across the UK there are nearly 50 divestment campaigns targeting local government pension funds calling on them to pull investments from all fossil fuel companies. In September, it was revealed that a total of £14 billion is invested in the fossil fuel industry by the UK’s public pension funds. Campaigners argue that these investments present a serious ethical and financial risk for councils.
1. Strathclyde Pension Fund report http://www.spfo.org.uk/CHttpHandler.ashx?id=30528&p=0
Lothian Pension Fund report http://www.lpf.org.uk/lpf1/downloads/file/692/fossil_fuels_-_report_on_i...
Edinburgh Council Pensions Committee Minutes 24-06-15 http://www.edinburgh.gov.uk/meetings/meeting/3701/pensions_committee
2. The South Yorkshire Pension Fund, which provides pensions for local authority workers in Barnsley, Doncaster, Rotherham and Sheffield.
3. Minutes of the 17/09/15 South Yorkshire Pension Fund Investment Board meeting can be found at: http://meetings.southyorks.gov.uk/
4. The Investment Board resolved to:
i) Affirmed its policy of active engagement with investee companies and reiterated that it would not divest from investments solely on environmental, social and governance grounds.
ii) Agreed to monitor carbon risk within its investment portfolios and would engage a specialist contractor to conduct a carbon footprint of the portfolio at an estimated cost of £4,000 (plus VAT).
iii) Formally confirmed that the Fund would continue not to directly invest in pure coal and tar sand companies.
iv) Agreed to revisit the subject following the Conference of Parties Conference to be held in Paris in December, and after completion of the carbon audit of the Fund.
v) Agreed that the Fund should become a signatory of the Carbon Disclosure Project (CDP).
vi) Noted that the Fund would seek to engage with pressure groups and fund members on the subject.
5. The fossil fuel divestment campaign is a growing international movement calling on institutions to divest (sell their shares) from fossil fuels to take action against catastrophic climate change.
6. Friends of the Earth Scotland released details of Scottish local government pension fund investments in fossil fuels in September 2015 http://www.foe-scotland.org.uk/lgps-fossil-fuel-investments
7. Friends of the Earth Scotland will be attending the United Nations climate negotiations known as COP21 in Paris from Monday 30th November.
8. Friends of the Earth Scotland is:
* Scotland’s leading environmental campaigning organisation
* An independent Scottish charity with a network of thousands of supporters and active local groups across Scotland
* Part of the largest grassroots environmental network in the world, uniting over 2 million supporters, 75 national member groups, and some 5,000 local activist groups. www.foe-scotland.org.uk