Guide to Local Government Divestment:
Introduction to local government divestment campaigns
Across the UK and the world, these investments are increasingly being challenged by the fossil fuel divestment campaign. In the UK there are over 30 divestment campaigns targeting local councils and the pension funds they manage.
The fossil fuel divestment movement calls for organisations, institutions and individuals to demonstrate climate leadership and divest – publicly sell your shares – from fossil fuels. It is the fastest growing divestment movement the world has ever seen.
Divestment aims to morally and politically bankrupt the fossil fuel industry. It has proven to be a powerful tool in movements past; an international campaign helped bring down the South African apartheid government. By divesting, we can break the hold of the fossil fuel industry over our political system, show our desire for, and create the space for action on climate change.
The call to divest local government pensions is also backed up by some powerful financial arguments – fossil fuel companies are increasingly recognised as risky investments, likely to become ‘stranded assets’, especially for long term investors like pension funds.
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. Additionally, more than 70 city, state and county governments have pledged to divest or passed motions in support of divestment.
While investment means buying stocks, bonds or other investments in order to generate financial returns, divestment is getting rid of particular stocks, bonds or investment funds. This could be for financial reasons, ethical reasons, or some combination of the two.
Fossil fuel divestment, therefore, is avoiding direct ownership of, or commingled funds that include, public equities and corporate bonds of fossil fuel companies.
Additionally, you could also consider reinvestment asks – these consider how money currently invested in fossil fuels could be reinvested into clean energy, local infrastructure or other public goods. To find out more about reinvestment, check out the Reinvesting Pensions report from Community Reinvest.
If you’re directly targeting a pension fund in your campaign (or institution controlling a pension fund) then the primary ask should be in line with the global divestment demands (listed above).
The primary ask to your target should always be full divestment from all fossil fuels, however, it’s also a good idea to have some ‘bargaining positions’ – should the fund not be willing to commit.
These are some options for ‘intermediate’ asks to the pension fund. For more information or advice on any of these, get in touch.
If your target doesn’t control a pension fund (e.g. a city council), there are still divestment demands you can make. The main way of doing this will be passing a divestment motion through full council.
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.
Our local councils are representatives of our communities and they have a responsibility to act in our best interests. This means doing what they can to prevent climate change – fossil fuel investments are at odds with this.
By investing in fossil fuels, local government pension schemes are endangering the futures of thousands of fund members. The fossil fuel industry is an increasingly financially risky sector to invest in – especially for long-term investors like pension funds (see key arguments for more on financial risk).
Pension funds are among the biggest investment pots in the world. In the UK, local government pension funds are worth over £230 billion, of which £14 billion is invested in the fossil fuel industry – a vast amount of money.
Local councils are some of the most accessible and accountable forms of government in the UK. No matter where you live, you have a local council representing you and you can have your voice heard.
During the anti-Apartheid divestment campaign, UK councils were some of the first institutions to use their public profile and divest from South Africa – stigmatising the Apartheid regime and ultimately contributing to its downfall.