It’s time to stop investing pension funds in fossil fuel companies

Divest Pensions from Fossil Fuels and Invest In A Local Green Recovery

Hertfordshire County Council (HCC) is the administering authority for the Hertfordshire Local Government Pension Scheme (LGPS). It has over 300 employer bodies and 100k members who contribute to this Fund with assets over £5.8bn. The Fund will evolve its strategy to protect its funding position and will consider the risks that the Fund is exposed to in agreeing changes to that strategy. This will include climate risk as well as other environmental, social and governance risks.

On the 24 February 2021, our County Council prospective candidate Nicholas Cox wrote to County Councillor Eric Buckmaster, asking him the following questions, we have abbreviated his answers and inserted them below each question:

  1. Do you agree that the Council should divest its pension fund from fossil fuels?

On investment matters and particular disinvestment from certain asset classes such as fossil fuels, the Fund has not fettered its investment managers in their investment decision making and the companies it invests in on behalf of the Fund. The fund gives discretion to its active investment managers on making the decisions on the companies the fund’s money is invested in. 

  1. What steps is the Council taking to end fossil fuel investments and invest in a green and fair local recovery?

As a Fund we have made an investment of circa. £260m in a climate aware Fund in the last 12 months. This particular investment will have a lower carbon footprint than the equity benchmarks such as the FTSE and will invest in the oil and gas sector but will favour companies where there are clear plans to decarbonise and transition to renewables and green energy.

  1. What steps will you take personally to ensure this issue is on the agenda of the Council’s Pension Fund Committee?

The Pension Committee has been doing a considerable amount of work on responsible investment and in particular the steps we as a Fund have taken to report our carbon footprint and reporting of stewardship, voting and engagement with companies that the Fund is invested in. There is still a lot more work to be done on responsible investment and this will continue to form a major aspect of the Pension Committee’s work agenda on an annual basis.

We are not satisfied with these responses. Recent analysis found that local government pension funds had suffered a £2 billion hit to oil investments since 2017. As the value of fossil fuels continues to decline, continuing to invest public money in this failing industry is becoming financially riskier and the imperative to divest from fossil fuels is ever more urgent. For example, Mark Carney, former Head of the Bank of England and now Head of Impact Investing at Brookfield Asset Management, has warned that the vast majority of oil reserves should be considered “un-burnable” if we want to avoid catastrophic climate change, resulting in oil companies’ reserves becoming stranded assets.

Hertfordshire County Council has over £129 million worth of pension funds invested in fossil fuel companies. These funds should be invested instead in low carbon or green technologies. We are urging Herts County Council to mandate its pension fund managers to freeze any new investments in fossil fuel companies and to divest all existing shares within 5 years.  We also urge the lower tier Councils to pressure the County to divest from fossil fuel companies and other unethical investments.

You can find all the latest information on local government pension investments in the fossil fuel industry here.

Locally our candidates have been involved in Divest Herts. You can sign a petition to ask HCC to divest funds invested in fossil fuel industries here.

Campaign supported by prospective candidates: