Baillie Gifford

Baillie Gifford ‘hypocrisy’ on £400m fossil fuel investments

An investment firm which funnels hundreds of millions of pounds into the fossil fuel industry has been attacked for “hypocrisy” after it urged the Scottish Government to cut carbon pollution.

A Ferret investigation has revealed that Edinburgh-based fund manager, Baillie Gifford, owns nearly £400 million worth of shares in nine global oil, gas and coal companies.

In 2019, however, the firm lobbied the Scottish environment minister, Roseanna Cunningham, to work towards “making Scotland a carbon neutral economy”. It said this would be good for the nation – and for Baillie Gifford.

MSPs and campaigners have now called on the firm, which has been the target of environmental protests, to stop investing in fossil fuels. They accused it of failing to practice what it preaches, and said it cannot be trusted on climate change.

MSP pension fund aims to be more ethical – but ups fossil fuel investment

In July, 2019, Baillie Gifford hosted a climate roundtable meeting at the Edinburgh Science Festival, of which it was a “headline sponsor“. Four of the firm’s representatives attended: Andrew Telfer, Michael Pye, Tim Garratt and Diane Esson.

Other business representatives and non-governmental groups were present, along with Cunningham and Cristiana Figueres, the United Nations diplomat credited with securing the crucial 2015 Paris climate change agreement.

Baillie Gifford has described the meeting in an entry in the Scottish Parliament’s lobbying register. The purpose was “to discuss some of the ideas that are being shaped to help Scotland claim its status as the global leader on climate change,” it said.

To make this “tangible”, the group was to be asked how it could lead “a concerted, collaborative and transformative approach,” the firm added.

“We were encouraging the Scottish Government to work with industry, public bodies and the public towards making Scotland a carbon neutral economy. We were discussing this because we believe that it is in the long term interests of both Baillie Gifford and Scotland.”

After the meeting, Edinburgh Science Festival tweeted its thanks to Baillie Gifford for hosting the event and said that the company “are making big steps towards sustainability both internally and externally through work groups and sponsorships”.

Baillie Gifford invests other people’s money in different investment funds. A Ferret analysis of its overseas growth funds shows it owns at least £399 million worth of shares in fossil fuel companies.

It owns £117m worth of shares in Japan’s biggest oil and gas company Inpex, which has oil and gas projects in countries such as Indonesia, Australia and Angola.

Other investments include £99m worth of shares in an Indian company involved in coal, oil and gas called Reliance Industries, £83m in the Chinese National Offshore Oil Corporation and £39m in Brazil’s state oil company, Petrobras.

Two of the companies Baillie Gifford put money into are in the Guardian’s list of the 20 companies which have contributed the most carbon dioxide to the world’s atmosphere since 1965.

They are Petrobras and Anglo-Australian coal, oil and gas company BHP Billiton. Between them, they are responsible for 18.5 billion tonnes of carbon dioxide pollution, which is over 50 times more than the UK’s annual emissions.

Baillie Gifford fossil fuel investments

Fossil fuel companyDescriptionInvestment from selected funds
InpexJapanese oil and gas company£117m
Reliance IndustriesIndian conglomerate with coal, oil and gas operations£99m
Chinese National Offshore Oil CorporationState-owned oil and gas company£83m
PetrobrasBrazilian state-owned oil and gas company£39m
ValeBrazilian company which mines coal£26m
Japan Petroleum ExplorationJapanese oil and gas company£24m
Indraprastha GasIndian gas company£7m
BHP BilitonAnglo-Australian company which mines coal£3m
Valeura EnergyCanadian company extracting oil and gas in Turkey£1m
Total£399m
Source: Baillie Gifford

On top of its overseas growth funds Baillie Gifford manages other funds, which are not included in these figures. It manages the £89m pension fund for MSPs in the Scottish Parliament, some of which is invested in fossil fuel companies such as Shell.

In December 2018 The Ferret revealed that Holyrood’s fund was invested in fossil fuels, arms, tobacco and an iPhone firm notorious for mass suicides. Two days after this story was published, the fund’s MSP trustees launched an ethical review of its investments.

Despite this review, Baillie Gifford increased its stake in Shell in the second quarter of 2019. In response, the protest group, Extinction Rebellion, blockaded their office for 11 hours in February 2020.

The ethical review is continuing but meeting minutes show the reform proposal under consideration would set up a new, more ethical fund alongside existing funds. This was criticised by campaigners, who pointed out that MSPs pensions would still be invested in controversial industries like fossil fuels.

Scottish Parliament to review ethics of pension investments

Labour MSP, Neil Findlay, argued that Scotland had to lead by example, particularly with the world climate summit, COP26, due to come to Glasgow in November. “However what we are seeing is the hypocrisy of organisations making grand statements about the environment on one hand but continuing to invest in fossil fuels on the other,” he said.

“No wonder people don’t believe a thing corporations and politicians say.”

Green MSP, John Finnie, added: “If Baillie Gifford were serious about the climate emergency, it would divest from fossil fuels. Until then it can’t be trusted to lead any conversations on the subject.”

Extinction Rebellion Scotland demanded to know who was given a seat at Baillie Gifford’s climate roundtable meeting. “Diplomats, politicians, and an investment firm who have thus far totally failed to curb global greenhouse gas emissions, set unambitious and dangerous targets for carbon neutrality, and continue to invest millions of pounds in the fossil fuel industry,” said the group’s spokesperson.

“Our future should not be left in the hands of the rich and the powerful.”

Friends of the Earth Scotland accused Baillie Gifford of still being “wedded to a future driven by some of the most polluting companies on the planet”.

The environmental group’s campaigner, Ric Lander, added: “It’s high time the Scottish Government and Scottish investors got serious about climate action and divested from fossil fuels.”

Sadly we do not yet live in a society in which we can reduce fossil fuel usage to zero without incurring substantial problems. Baillie Gifford

The Scottish Government stressed that Scotland’s “world-leading response to climate change” should to be a national endeavour. “There is a significant role for all sectors in supporting the transformational change which is needed,” said a spokesperson.

“We will work in partnership with the private sector to deliver a successful, fair, green and growing economy which improves the wellbeing of the people and companies of Scotland.”

The spokesperson added: “Ms Cunningham was taking part in a roundtable discussion with around 30 senior representatives from the public and private sectors and environmental groups, and she provided an update on the climate change bill.”

Baillie Gifford declined to comment. In an earlier response to Extinction Rebellion, the firm pointed out that its investments in oil and gas companies had fallen from 6.9 per cent of client assets in 2002 to 1.3 per cent by the end of 2019.

It said: “Sadly we do not yet live in a society in which we can reduce fossil fuel usage to zero without incurring substantial problems, and virtually everyone has a carbon footprint. We are therefore working closely with a number of external experts and working groups to help us evaluate the necessary transitions.”

The firm added: “We agree that the global economy needs to transition away from carbon and that the fund management industry has an important role to play in this process through engagement, voting and capital allocation.”

Decision on Strathclyde Pension Fund fossil fuel investments delayed

The Ferret reported on 4 March that Glasgow councillors postponed a decision on whether or not Strathclyde Pension Fund should withdraw its £700 million investments in oil and gas companies.

The fund’s managers had argued against divestment, but campaigners had urged councillors to put their money elsewhere to show they were taking the climate emergency declared by the council seriously.

The Green MSP, Patrick Harvie, welcomed the decision, saying councillors had “refused to shut the door on divestment”. But he added: “It was concerning to hear tired and largely discredited arguments about legal duties being trotted out again.”

At a meeting on 4 March Green councillor, Martha Wardrop, and SNP councillor, Richard Bell, argued in favour of divestment while the SNP’s Ruairi Kelly argued against it.

Keep investing in fossil fuels, pension fund tells council

Photo thanks to iStock/VanderWolf-Images. This story was published in tandem with the Sunday National.

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