Wednesday 28th September 2016                 Change text size:

Scottish local government pensions invest £1.7 bn in fossil fuels



Scotland

New data published in the Sunday Herald yesterday revealed that Scottish local authority pensions have an astonishing £1.7 billion invested in fossil fuel companies, such as Shell and BP. Before today it was not known the extent to which the funds, held by Scotland’s 11 Local Government Pension Schemes on behalf of council workers and related organisations, were exposed to the “carbon bubble”.

The research, carried out by Friends of the Earth Scotland, volunteers and partners (350.org, Platform and Move Your Money) shows that:

– The £1,664 million (£1.7 bn) invested in fossil fuels represents 5.2% of the total value of the funds.

– This represents £311 per Scottish resident, invested in coal, oil and gas by local government.

– Money is invested into multinational fossil fuel companies including £56 million in Rio Tinto, £39 million in BP and £31 million in Shell.

– Strathclyde Pension Fund came top in Scotland and second largest in the whole of the UK, with £752 million invested in fossil fuels.

– Of the six pension funds investigated by the Sunday Herald in 2014 the total value invested of fossil-fuels has increased by £300 million to £1.4 billion.

The news comes at a time when fossil fuel investments have been falling in value, posing both financial and environmental risks to funds. Campaigners are calling for funds to invest in line with a scientific evidence that shows that 80% of fossil fuel reserves need to remain in the ground to avoid catastrophic climate change. Action on climate change will leave fossil fuel investments worthless, creating a carbon bubble which would be deeply damaging to any funds exposed to them.

Scottish organisations such as the United Reform Church, University of Edinburgh and University of Glasgow have already made moved to quit investing in fossil fuels, joining 389 institutions globally that have committed to divest.

Pensions can be invested sustainably.  In February the Strathclyde Pension Fund announced a £10 million investment in smaller-scale renewables and in 2014 the Falkirk fund invested £30 million in social housing.

Dave Watson, Head of Bargaining and Campaigns at UNISON Scotland has supported the Fossil Free campaign said: “Local authorities have a duty to cut carbon emissions under the Climate Change (Scotland) Act. This, together with the growing financial risk, is a major factor Scottish local authority pension funds need to consider when making investments in the fossil fuel and similar industries. Divesting from fossil fuels is the prudent way for councils to meet both their fiduciary duty to members and their public law duties.”

Alison Johnstone, MSP for Lothian, has asked questions in the Scottish Parliament about fossil fuel investment. She said: “Pension schemes are supposed to provide security for workers when they retire. At the moment, our local authorities are playing reckless games with their employees’ money, and it’s time the Scottish Government took more action on this issue. Oil, gas and coal are running out, and the fossil fuel industry is no longer a sustainable, sensible investment choice. Scottish Ministers and public sector pension schemes should urge local government to ask their members how they want their pensions to be invested.”

Cllr Jim Orr, Edinburgh City Council Pensions Committee said: “There is a growing recognition that pensions and other long term investments often support patterns of unsustainable and hugely damaging fossil fuel consumption. What we need is for more stakeholders, particularly individual pension scheme members, to make their voices heard so that there is pressure for investment strategies to reflect their wishes.”

Maggie Anderson, Lothian Pension Fund member said: “The only thing that makes sense is to invest in renewables. We need to look to the future, not kill it by persisting with what belongs in the past. That’s what I would hope for from my pension fund, especially in Scotland which has so many natural resources of renewable energy.”

Kirsty Noble, Strathclyde Pension Fund member said: “Local governments and their pension funds really have to take the lead in action to avert climate change – whatever the rest of us do individually is small in comparison with the potential for government action. Given the growing understanding of the need to ‘keep it in the ground’ these investments are increasingly risky and the local authority funds seem to be overexposed to this risk.”

Ric Lander, FoE Scotland campaigner for Fossil Free pensions said: Communities around the world are calling for an end the environmental destruction that comes with coal mining, fracking and deep-sea oil. Our pension money shouldn’t be fuelling this damage: at time when public resources are being squeezed, we should be redirecting this money to socially useful projects such housing and clean energy. Across Scotland people from churches, unions, universities and community groups are asking why so much of their money is invested with so little accountability.  Funds should listen to their members and make a shift away from dirty energy and towards clean and safe investments.”


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