Councillors from four rival political parties have called on Scottish local government pension funds to end their investments in fossil fuel companies.
Seventeen newly elected councillors from across Scotland signed a pledge calling for divestment in the lead up to the local government elections on 6 May. They included members from the SNP, the Greens, Labour and the Lib Dems.
A further 13 newly elected councillor members in Edinburgh also backed a specific call for the Lothian Pension Fund (LPF) to drop its fossil fuel investments. These names are currently under embargo with Divest Lothian expected to report them later this week.
Environmentalists want the funds to end their financing of fossil fuels because their use for heating, electricity and fuel is one of the main drivers of the climate crisis. Scottish local government pensions currently have £1.2bn invested in fossil fuel firms.
Friends of the Earth Scotland told The Ferret that divestment from fossil fuels was a “powerful act of solidarity” with global communities facing the brunt of the climate crisis. It was “fantastic” that the call for divestment had resonated “across the political spectrum”, it added.
The pledge signed by the new councillors was set up by the campaign group, UK Divest. It also garnered support from 363 candidates in England and 61 in Wales.
In total, local government pensions in the UK have nearly £10bn worth of shares in companies which produce oil, natural gas and coal. According to UK Divest, these shares are “contradicting local, national and international commitments to tackle climate change”.
All eleven Scottish local government pension funds still have fossil fuel firms in their investment portfolios. Across Scotland, these make up 2.5 per cent of the total investments made by the funds.
Strathclyde Pension Fund (SPF) accounted for the largest share of Scottish local government pension fund’s stakes in fossil fuel companies.
Its investments – valued at £508m – made it the second biggest funder of the firms among all local government pension funds in Britain, behind only Greater Manchester.
Scotland’s second-biggest local government pension fund – Lothian Pension Fund (LPF) –reportedly has £165m currently invested in the sector. Divestment has support from the two biggest parties on Edinburgh City Council, the SNP and Labour.
Ric Lander, divestment campaigner at Friends of the Earth Scotland, said that the group would be working with the councillors to “end the money pipeline between councils and the fossil fuel industry”.
Lander said: “It is fantastic to see the call for fossil fuel divestment resonate with councillors from across the political spectrum.
"Divesting from fossil fuels is also a powerful act of solidarity. Communities across the world are threatened by extreme weather, rising sea and disease due to the climate crisis which is being driven by fossil fuels."
The Role of Local Pension Funds
A spokesperson for Strathclyde Pension Fund said: “SPF is one of the first large investors in the world to commit to developing a set of minimum standards for firms as part of its Climate Strategy – and to have agreed to include divestment as a tool where these standards are not met.
“In the meantime, the fund’s investments in fossil fuels have been steadily reducing for a decade and are already dwarfed by its interests in renewable energy.”
The spokesperson also pointed out that SPF is considerably larger than most pension funds, meaning its exposure to fossil fuels might actually be smaller in relative terms compared with other funds.
A Lothian Pension Fund spokesperson said: “We welcome the focus being placed on climate change and the role that investment markets have to play in the energy transition.
“LPF has a long-standing commitment to being a responsible investor, and it has a policy of engaging with companies and policy makers seeking real-world changes, rather than a policy of exclusion and divestment.
“More practically, the fund is investing in climate solutions, such as renewable energy, and has agreed not to subscribe to new equity and fixed income issuance from companies whose business plans are not aligned with the Paris Agreement.
“We welcome the interest that the newly elected councillors of the City of Edinburgh Council have in responsible investment, and we will continue to engage with the councillors on developments in this area.”
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