As Trinity College Cambridge divests, UK council pensions still hold £10bn in fossil fuels

The requests reveal the pension investment trends of more than 80 UK councils

The results of the requests, which pertained to investments held in the 2019/20 financial year, have been published today (23 February) by Friends of the Earth and Platform in the form of a report.

The organisations sent requests to 98 local authorities and 85 provided information. Collectively, these 85 councils held £9.9bn of investments in fossil fuels through their pension schemes – the equivalent of £1,450 for each person accessing a local government pension scheme in the UK.

Councils representing Greater Manchester, the West Midlands and Strathclyde are named in the report as the three local authority pension funds with the largest investments in fossil fuels. Collectively, they represent 20% of the investments analysed in the report. In terms of the highest percentage of their respective assets invested, the top three areas represented are Teesside, Dyfed and Dorset. Edie has reached out to these local authorities for comment.

As for the fossil fuel firms financed, BP, Royal Dutch Shell and BHP account for 40% of all direct investments.

The report does praise the many local authorities that have either already divested fully from fossil fuels or have public commitments to do so. The likes of Southwark, Islington, Lambeth, Waltham Forest, and Cardiff councils have made this commitment.

But, ultimately, it urges the rest of the UK’s local authorities to follow suit – particularly if they have made a climate emergency declaration, as three in four have.

“Declaring a climate emergency may garner good headlines but too often it seems to stop there,” Friends of the Earth divestment campaigner Rianna Gargiulo said.

“Councils can’t make a bold claim about saving the planet while continuing to invest in fossil fuels. Local authorities have the power and duty to ensure local workers not only have a pension for their retirement, but also a future worth retiring into.   

“Instead of stubbornly sticking with old systems of investment that worsen climate breakdown, councils should invest in renewable energy and social housing. These are the areas that benefit communities and households and are a better investment in every sense.”  

Council’s responses 

Responding to the report, a spokesperson for Strathclyde Pension Fund said: “Strathclyde Pension Fund recognises the climate emergency and it is clear that, in addition to the obvious risks it presents for everyone on the planet, it presents specific risks for investors. The Fund also believes the global transition to a low-carbon economy is essential – and that includes the de-carbonisation of its own investments.

“Historically, though, the fund has felt that divestment is a blunt tool in terms of securing that transition to a low carbon economy and not on its own radical enough to have a meaningful impact on the climate emergency. Instead, it has preferred to be an activist investor – pushing for improvements on everything from carbon disclosure and lowering emissions, while committing hundreds of millions of pounds into a range of renewable energy projects.

“However, the fund is currently refreshing and further developing its Climate Change Strategy, including consideration of a net-zero objective. That process will also include consideration of future investment strategy – with input from the fund’s Board and Committee.”

A spokesperson for Dorset County Council said that the authority has “undertaken a major strategic review of its investment strategy and, in September 2020, agreed on a new decarbonisation strategy.

Cllr Andy Canning, Chair of the Dorset County Pension Fund, said: “We are fully supportive of the declaration of a climate emergency and have made changes that will deliver significant reductions in our carbon footprint. Our intention is to substantially reduce our carbon footprint without sacrificing returns.” 

Trinity College Cambridge

The news from Friends of the Earth and Platform comes shortly after the University of Cambridge’s Trinity College made a commitment to fully divest from fossil fuels over the next five to ten years. 

Students and green groups have been campaigning for such a move for several years now. The College is the richest across Oxbridge with a total endowment of £1.3bn.

Trinity College made the announcement as part of a new commitment to achieve net-zero before the national 2050 deadline. It will remove all direct investments in fossil fuels by the end of the year, then turn its focus to indirect investments. It estimates that this process will take between five and ten years. 

In a statement, the College said it will accelerate action to reduce emissions from other investments as it works on the divestment, which will move around 1% of its investments. Notably, 60% of its endowment is invested in property.

“We now have an ambitious plan to achieve net-zero before 2050, which, while challenging, given the nature of the endowment’s portfolio, is achievable and consistent with the College’s income growth objectives,” Trinity’s senior bursar Richard Turnill said. “We will move rapidly where we can, starting with divestment from all fossil fuel exposure in our public equities this year.”

The UK Government has continually prioritised engagement over divestment when it comes to legislating for investors to align with the national net-zero target. The recently-approved Pensions Bill stops short of divestment requirements. Its main climate provision is a new mandate requiring large pension schemes to disclose the climate-related risks posed to assets in their portfolios by the end of 2022, in line with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD).

Sarah George