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Tuesday, February 23, 2021

Hard graft needed to fufill carbon-free promises

Today's Guardian reports that local councils that have declared a climate emergency are continuing to pour money into fossil fuels through their staff pension funds.

They say that an assessment by the campaign groups Platform and Friends of the Earth have found nearly £10bn worth of investments in fossil fuels, including oil and gas companies such as BP and Shell, were found in local government pension funds in the last financial year:

Councils in Greater Manchester, Strathclyde, West Midlands and West Yorkshire had the biggest investments in fossil fuels, accounting between them for nearly a fifth of local government pension fund fossil fuel investments in the UK. The Greater Manchester combined authority had more than £1bn invested in fossil fuels in the financial year 2019-20, accounting for nearly 5% of its pension fund, with the other three areas at about £500m in investment each.

All of these combined authorities have declared a climate emergency. Councils often join together to invest their pension funds, so the funds do not always correspond exactly to specific local authorities.

Councils have been reducing their exposure to high-carbon investments. Similar research in 2015 found £14bn was invested in fossil fuels.

Several other smaller pension funds also had about 5% of their assets invested in fossil fuels, including Teesside, Dyfed and Dorset.

Three companies alone – BP, Shell, and BHP – account for about 40% of all direct investments in fossil fuels by local council pension funds. Of the fossil fuel investments by councils, the majority – about £6.5bn out of £10bn – were in oil and gas, but about a third of the investments were in coal. Coal has become a hot issue for councils as Cumbria is reconsidering a new coalmine, after outrage when the government gave green light to the proposal.

Campaigners said the findings showed councils must take action to ensure their funds were not supporting fossil fuels. Rianna Gargiulo, a divestment campaigner at Friends of the Earth, said: “Declaring a climate emergency may garner good headlines, but too often it seems to stop there. Councils can’t make a bold claim about saving the planet while continuing to invest in fossil fuels. Local authorities have the power and duty to ensure local workers not only have a pension for their retirement, but also a future worth retiring into.”

The issue of course is nothing to do with a lack of will on the part of council. Pension trustees have legal duties that need to be balanced against politicakl priorities, the most important duty being to protect the interests of their pensioners. 

Changing investment strategies without breaching those fiducary duties is a long term game. It cannot be achieved overnight. Having said that, councillors are entitled to see some sort of roadmap with clear targets so as to get some assurance that the boards are moving as fast as they can in the right direction.

What do we know about the funds managed on behalf of Swansea City and Neath Port Talbot county borough?

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