Local government pension fund to drop investments in failing fossil fuel firms

Scotland’s largest local government pension fund has announced it will drop investments in fossil fuel firms which fail to meet environmental standards.

The Strathclyde Pension Fund, which is worth £24 billion and has around 250,000 members, will become one of the first major funds in the world to adopt such a divestment policy.

Members of the Strathclyde Pension Fund Committee agreed the move on Wednesday afternoon in response to a call from Glasgow City Council – the fund’s biggest employer member.

Committee chairman Councillor Richard Bell said: “When it comes to securing a just transition to a low carbon economy, Strathclyde has always been happy to put its money where its mouth is.

“The fund has long been a leader in terms of measuring and disclosing the carbon impact of its investments; using its clout as a shareholder to push for better environmental outcomes and backing renewable energy.

“All of that will continue – and that is where we can perhaps have the greatest direct impact on the climate emergency.

“However, it’s important that we continue to be bold and to lead from the front – and that is why we have agreed divestment will play a part in our strategy in future.

“We’re putting fossil fuel companies on notice that, if they don’t take their responsibilities on carbon or climate seriously, then we are prepared to drop them from our portfolio.”

The fund is operated by Glasgow City Council for its own area and on behalf of East Ayrshire, North Ayrshire, South Ayrshire, North Lanarkshire and South Lanarkshire.

It comes with the city due to host the Cop26 climate change conference this November.

Mr Bell said they will also seek to collaborate with other funds beginning to introduce divestment policies including the New York State Pension Fund.

He added: “Our direct investments in clean, renewable energy already dwarf our interests in industries like oil and gas.

“We also understand that some of those traditional energy firms are now at the forefront of investing in a low carbon future – but responsible, forward-thinking companies will welcome Strathclyde setting a high bar.

“Ultimately, this is about saying that we won’t stand for companies putting our investment – and the retirement savings of hundreds of thousands of our members – at unnecessary risk.”

Friends of the Earth Scotland’s divestment campaigner Sally Clark called the decision a “positive step” but added “there is much more to do in order to set Scotland’s largest public pension fund on a fossil-free path”.

She said: “Oil, gas and coal companies’ business model relies on worsening the climate emergency, damaging communities in Scotland and globally.

“Councillors, fund members and concerned citizens will be waiting to see if a possible showdown meeting in September will deliver the definitive standards and timelines that mean actual divestment from fossil fuels.

“Similar funds such as the Cardiff, Lambeth and Waltham Forest pension funds have already committed to go fossil fuel free and the Strathclyde Pension Fund can join them.

“The timing is critical. Divestment from climate polluters could provide global leadership as Glasgow prepares to host the crucial UN climate talks, helping lead billions of pounds into green investments.

“Glasgow can show that support for coal, oil and gas companies is incompatible with the action we need to avoid further climate breakdown.

“Huge praise must go to those local campaigners who have fought hard for years to convince our leaders that ending investments in fossil fuels is the right thing to do for people and the planet.”

Unison regional organiser Simon Watson said: “We are facing a climate emergency and we all have to take responsibility. Investing in fossil fuels is ethically unsustainable and a financial risk to workers’ futures.

“Strathclyde is the biggest pension fund in Scotland, and those who pay into their pensions expect the custodians of the fund to take this into account.

“Councillors enter politics to represent the hopes of local people and to make a difference. Today they fell short of the mark.

“With the Cop26 UN climate summit coming to Glasgow this year, it would be an embarrassing failure of leadership if Strathclyde Pension Fund does not take decisive action to rid itself of fossil fuel investments.”