A report from Friends of the Earth Scotland has found that UK local government pensions currently invest £16.1 billion ($21.4 billion) in fossil fuels, which accounts for 5.5% of the total value of the £295 billion Local Government Pension Scheme. This is up 17% from the £13.8 billion in fossil fuels invested the previous year.
“With the government now requiring many more workers to join a pension fund through auto-enrolment, their influence over the wider economy will only grow,” said the report. “Pension funds, and the decisions made by the people who run them, will profoundly shape our future.”
Friends of the Earth Scotland says the burning of fossil fuels is the main driver of climate change. “Further extraction and burning of fossil fuels is not compatible with a just, safe, and fair future, and investing in fossil fuels is deeply irresponsible,” said the group.
According to the report, the £16.1 billion represents £2,628 invested in fossil fuels for each of the 6 million participants of the Local Government Pension Scheme, a £295 billion pension scheme administered by 97 individual authorities. It also found that £9.1 billion of those fossil fuel funds is invested through intermediaries.
The individual fund with the most invested in fossil fuels was the Greater Manchester Pension Fund, which the report said invests one out of every 10 pounds in fossil fuels, and has the largest overall investment with £1.8 billion.
However, the report also cited six pension funds in the local government scheme that have committed to reducing their fossil fuel investments: the Environment Agency Pension Fund, Haringey, Hackney, Waltham Forest, Southwark, and South Yorkshire. It also said that many other funds have also committed to increase investment in sustainable projects, such as local renewable energy.
The £7.5 billion South Yorkshire Pension Fund committed to a low-carbon investment policy that excludes coal and tar sands companies. Its policy states that the fund will cut its investments in fossil fuels in-line with the Paris Agreement. And in October 2015, the £3.27 billion Environment Agency Pension Fund, part of the local government scheme, said it would end most of its investments in fossil fuels within the next five years. The fund’s policy states that, it will cut shareholdings in coal by 90%, and oil and gas by 50%.
“Everyone has a stake in how pension funds are invested,” said the report, “and council pensions, managed with input from our elected local councilors, have a major role to play in creating a pensions industry that is not just paying out pensions, but also making sure we will have a future worth retiring for.”
Tags: Earth Scotland, Fossil Fuels, Pension, UK