We’re asking council pension funds to commit to divest all their funds from fossil fuel companies. Divestment is simply the opposite of investment – it means getting rid of stocks, bonds or investment funds that are unethical.
The movement for fossil fuel divestment began originally on university campuses, but it has quickly spread. More than 50 pension funds globally have now made divestment commitments, moving millions out of the fossil fuel industry.
As public bodies, local councils have a responsibility to work for the public good; they shouldn’t be financially and politically supporting the most destructive industry on the planet.
This November, the UN climate talks will take place under the presidency of Fiji in Bonn, Germany. Although this meeting is not as significant as the Paris talks were in 2015, the world’s governments will be coming together to affirm their commitments to tackling climate change and discuss implementing the Paris Agreement.
This year, with Fiji as the President of COP23, the Pacific region will show the world what true climate leadership is. The Pacific Climate Warriors – a network of Islanders coming together under the banner ‘we are not drowning, we’re fighting’ – will be in Bonn to stand up for the Pacific and call for action to keep their islands above water.
They emphasise that there is no time to wait for the big polluters to act. People need to take action out of necessity to stop the damage caused by fossil fuel companies to their islands, cultures and environments. Read more about their plans and Declaration here.
Instead of funding the climate crisis, council pensions could be backing a clean, regenerative economy. Check out Community Reinvest’s research into how council pensions could be reinvested for public good.
Here are some more examples of councils making pension fund investments into clean energy infrastructure and public goods include:
Strathclyde Pension Fund invested £10 million in Albion Community Power, who own hydro stations with capacity to power 4,000 homes.
Falkirk Pension Fund provided £30 million for a major programme of 190 new homes, including council housing, in the Forth Valley.
Lancashire County Council invested £12 million into Westmill Solar Co-operative, a community owned solar farm.
To date more than 800 institutions across the globe representing funds worth over $5 trillion have made some form of divestment commitment. They include universities, faith and medical institutions, cities such as Seattle, Melbourne and Berlin, the Rockefeller Brothers Fund, heirs to the Rockefeller oil fortune, as well as big financial players such as Norway’s sovereign wealth fund.
In the UK, over 100 institutions have made commitments, including six council pension funds, and 12 councils have passed supportive motions. Divestment is also backed by Unison and the Trades Union Congress.
Shareholder action can be an effective tool to make small reforms at a company – such as pressuring Apple to institute better labour practices at the factories it works with in China – but it won’t achieve the fundamental changes to the business model of the fossil fuel industry needed: keeping their coal, oil and gas reserves in the ground.
Over the last two decades, there has been an attempt to use shareholder action to change the behaviour of the fossil fuel industry. While there have been some limited successes — instituting sustainability practices inside the company, for instance — there haven’t been any resolutions that have been able to address the core problem with the industry: the massive amounts of carbon they insist on dumping into the atmosphere. For more information, click here.
Platform put in Freedom of Information requests to the councils that manage all the UK local authority pension funds asking for a full list of investments for the financial year 2016/2017 in an excel spreadsheet. You can see the requests and responses on www.whatdotheyknow.com. Using the data provided – or pension fund annual reports and other official documents where information was not provided – Platform, with help from lots of volunteers donating their time, has analysed this data to calculate the amount invested in fossil fuels overall and by pension fund.
How did we analyse the data?
We put the investment data for each fund into a google spreadsheet. A script pulled out the direct fossil fuel investments using the Carbon Underground 200 that identifies the top 100 public coal companies globally and the top 100 public oil and gas companies globally, ranked by the potential carbon emissions content of their proven reserves.
But this is not all. Much of what UK councils invest on the stock market happens through pooled investment vehicles. To estimate how much of these investments is in fossil fuel shares, a script pulls out the top 15 of each fund’s investments. We then analysed them manually picking out the pooled investment funds/vehicles that, from our research, we knew to contain fossil fuel investments. With these, we took an average percentage (10%) as the proportion of fossil fuel investments in the fund/vehicle.
We added 10% of the market value of funds/vehicles with fossil fuel investments to the market value of direct fossil fuel investments to get a total amount invested in fossil fuels for each fund.
What checks did you do?
We manually checked the names of fossil fuel companies to make sure that they were actually real fossil fuel companies. We also manually checked to see if these 200 companies were known by different names because of mergers etc. When transferring or pasting data we manually checked it was correct.
We researched funds and investment vehicles and 10% was an average figure. 10% is how much of the FTSE AllShare index is taken up by the Carbon Underground 200 companies. Pooled funds following other indices or markets could contain more fossil fuel shares (e.g. FTSE250), or less (e.g. Japanese tracker funds).
The amount invested into fossil fuels has not changed significantly in proportion to the overall size of the pension funds. That is, in 2015 UK council pension funds invested £14bn into fossil fuels representing 6% of their total investments, and in 2017 they invest £16.1bn representing 5.6% of their total investments. This shows that in the two years since the Paris Accord on climate change, councils have not made any significant changes to their investments in response to calls from the climate movement, governments, and shareholders to take climate risk into account.