[Westminster, UK] Today, MPs will debate the financial and ethical risks of fossil fuel investments by Pension Funds, after a third of serving MPs and 29 former MPs have called on their own pension fund to divest its significant fossil fuel holdings.
The cross-party group of MPs has asked the Parliamentary Pension Fund to disclose its investments in carbon-intensive industries, and publicly commit to phasing out fossil fuel investments [1]. In response, trustees of the Parliamentary Pension Fund are due to produce a Climate Change Investment Policy for the £700m fund, which currently holds £11.68m shares in fossil fuel company BP Plc, its largest single holding, and £10.95m in Royal Dutch Shell [2,3].
The UN’s October report on limiting global warming to 1.5°C demands that world leaders urgently increase efforts to reduce greenhouse gas emissions by enacting far-reaching and unprecedented changes in all aspects of society within the next few years. In contrast, fossil fuel companies are on course to increase their discovery of new oil and gas reserves by 30% in 2019 [4] and dedicate only 1.3% of their spending to clean energy projects [5].
Bank of England Governor Mark Carney, the Environmental Audit Committee and major global fund managers have publicly warned that people’s pensions are at risk by exposure to overvalued carbon assets as the world moves to cheaper renewables and governments legislate for net zero emissions [6].
The debate, secured by Liberal Democrat, Sir Ed Davey MP, comes at a time of intense focus on the climate crisis, following the recent declaration of a ‘climate and environment emergency’, by parliament, evidence of record levels of carbon dioxide in the atmosphere and a fourth UK-wide school climate strike taking place on Friday.
Ed Davey, former Energy and Climate Secretary and MP for Kingston and Surbiton, said: “Declaring a climate emergency is the easy part – now we need strong action to make net zero emissions a reality. By continuing to invest in fossil fuel firms, we are fuelling the fire of climate breakdown – and risking another financial crash. We must decarbonise capitalism.
UK banks and pension funds must stop making the climate crisis worse and urgently switch to investing in clean tech to secure both our planet and people’s future pensions.”
Caroline Lucas, MP for Brighton Pavilion, said: “The worst impacts of climate breakdown are being felt by those who have done the least to cause the problem, as shown by the devastating impacts of Cyclone Idai in Mozambique, Malawi and Zimbabwe. It is morally unacceptable that we are helping to fund this by investing in fossil fuel companies. It’s time MPs joined the majority of UK universities, numerous faith groups and a growing number of local authorities in saying we can no longer use our pension funds to gamble with people’s lives and with the future of the planet. The climate emergency demands that all pension funds divest from fossil fuels and invest in positive solutions to the climate crisis.”
The group of cross party MPs, spearheaded by Lucas, have been pressuring the Parliamentary Pension Fund to divest its significant holdings in fossil fuels since 2014. The ‘Divest Parliament’ campaign has now been backed by one third of MPs, including 20 Conservatives such as Nicky Morgan, James Heappey, and Lord Deben (Chair of the Committee on Climate Change).
If Parliament decides to divest the MPs Pension Fund from fossil fuels, it will join the Irish National Infrastructure Fund, the Greater London Authority’s Pension Fund, the New York City Pension fund, local authorities including Southwark and Islington and two thirds of UK universities. Globally, more than 1000 funds worth over $8.7 trillion have made divestment commitments [7].
ENDS
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Notes to Editors
[1] Divest Parliament pledge text available here and full list of supportive MPs available here. The campaign asks the Pension Fund to ‘quantify, review and disclose its investments in carbon-intensive industries, engage in a dialogue with fund members and publicly commit to phasing out fossil fuel investments over an appropriate time-scale.’ www.divestparliament.org
[2] See coverage in The Guardian.
[3] According to the 2018 report, the largest holding of the PCPF is in BP Plc (£11.68m). The fund also contains holdings in Royal Dutch Shell Plc (£10.95m).
[4] Rystad Energy have reported that the industry is on course to increase discovery of new oil and gas reserves by 30% in 2019
[5] A recent report by Carbon Disclosure Project revealed that on average, fossil fuel companies allocated just 1.3 per cent of their total 2018 capital expenditure to green energy projects, coverage in The Financial Times.
[6] Consulting giant Mercer, UK fund manager Legal & General and the world’s largest fund manager, BlackRock, have all produced reports in 2019 on the investing implications of climate change.
[7] To date, over 1000 institutions across the globe – representing funds worth over $8.7 trillion – have made some form of divestment commitment. Full list of commitments available here.