UK Councils have £14bn invested in 'risky' fossil fuels

UK councils have invested around £14bn - equating to 6% of their collective pension funds - into risky fossil fuels, according to new figures released today (24 September).

The research marks the first time that the £231 billion investments of all 418 local councils have been ranked by fossil fuel investment and released publicly

The research marks the first time that the £231 billion investments of all 418 local councils have been ranked by fossil fuel investment and released publicly

The research comes from consumer group 350.org, which warned that much of the planet’s fossil fuel reserves will have to stay in the ground, meaning oil and gas companies could be holding billions of pounds of ‘stranded assets.

As well as the financial risks, 350.org said Councils had an ethical obligation to divest from fossil fuels.

“Public investments in fossil fuels are fuelling dangerous climate change, and present a threat to the pensions of 4.6 million public sector workers,” said Danni Paffard of 350.org. “There’s a strong ethical and financial case for local councils to divest from fossil fuels and reinvest into infrastructure fit for the 21st century.” 

Transparency

The research marks the first time that the £231bn investments of all 418 local councils have been ranked by fossil fuel investment and released publicly.

The Greater Manchester Pension fund tops the list with fossil fuel investments worth £1.3bn, accounting for almost 10% of its total portfolio.

The Strathclyde Pension Fund, which invests on behalf of several Scottish Councils, has the second largest fossil fuel investment at £750m.

Opportunity cost

Reinvesting the £14bn of fossil fuel shares into local infrastructure would reportedly fund the building of another 200,000 new homes for social housing, or the installation of solar panels on two million homes, 10,000 schools and 20,000 public buildings.

“Instead of wasting £14bn of public pensions on multinational climate wreckers, we could reinvest into renewables and housing that serve local residents, create jobs and safeguard pensions,” said Mika Minio of social justice campaign group Platform, which contributed to the research.

How does your council fare?

Grassroots movement

Twelve new campaigns calling for their local council to divest from fossil fuels will launch today, adding to the 18 existing initiatives.

Oxford and Bristol City Councils have already taken a lead in making fossil free commitments, joining 50 cities internationally and larger institutions like the Norwegian Government Pension Fund. There are 389 institutions globally that have committed to divest, and investors managing more than $2.6trn.

Earlier this week, investors worth more than £1bn, headed by Leonardo DiCaprio and his charitable foundation, commited to divestment at Climate Week NYC.

Carbon bubble

Campaigns to divest have been boosted by increased awareness of the financial risks to investors of ‘stranded’ fossil fuel assets.

The Bank of England and G20 Financial Stability Board are currently investigating the risk to the economy of the ‘Carbon Bubble’, while recent reports have claimed that fossil fuel investor will lose money on a 2C planet.

“There is a growing body of evidence suggesting that the financial risks associated with climate change will impact investment portfolios," said Natalie Smith of environmental law group Client Earth.

“If pension fund trustees fail to properly manage these risks in their investment decision-making process, and there is a consequential decline in value of the pension pots of members, then trustees and investment managers could be sued for breaching their fiduciary duties.” 

Brad Allen

 


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