MSP pensions put £3.2m into ‘unethical’ firms

The pension fund for Scotland’s MSPs is investing £3.2 million in weapons, tobacco and dirty fuels despite the dangers they pose to life, health and the planet. 

A new analysis reveals that the Scottish Parliament scheme is funding firms under fire for Trident, killer drones, cigarettes and climate pollution. It has prompted angry condemnations from some MSPs, who say that parliament’s moral integrity is being destroyed.

A multi-million-pound pension fund for 127 MSPs is run by private investment managers and overseen by a board of trustees, most of whom are MSPs. In 2015 the fund gave £587,000 to three leading arms traders: Rolls Royce, Ultra Electronics and Meggit.

Rolls Royce makes the reactors that run Britain’s nuclear submarines, including those armed with Trident nuclear missiles based at Faslane. Ultra Electronics and Meggit help to make military drones used for lethal strikes, causing the University of Edinburgh to withdraw its investment from Ultra Electronics in 2013.

The MSP pension fund also poured £474,000 into two big international tobacco companies, British American Tobacco and Japanese Tobacco. The firms are taking the UK government to court for hitting their profits by introducing plain, un-branded packaging for cigarettes.

The biggest slice of the pension fund – £2.1 million – went to 15 major coal, oil and gas companies, blamed for the carbon dioxide emissions that are disrupting the global climate. One of the biggest beneficiaries was BHP Billiton, the target of fierce attacks this weekend by Colombian environmental activists on a visit to Scotland (see table below).

The Independent MSP, John Finnie, has been campaigning for the Scottish Parliament to end its “unethical” investments. He accused fellow MSPs of being “prevaricating, dis-interested, unaware and above all hypocritical” about the issue.

MSPs’ pensions should not be fattened further at the expense of our planet or its residents’ health and well-being and I am ashamed that the overwhelming majority of my colleagues seem relaxed to benefit personally from socially and environmentally destructive companies,” he said.

The Green MSP, Alison Johnstone, pointed out that the Scottish Parliament was increasingly out of step with the growing divestment movement backed by universities, pensions funds and banks. Last month, the governor of the Bank of England, Mark Carney, warned of the “potentially huge” financial risks of continuing to invest in fossil fuels.

MSPs should demand change, Johnstone argued. “Our parliament aspires to wisdom, justice, compassion and integrity – these words are carved into Holyrood’s ceremonial mace. Investing in unburnable fossil fuels and destructive arms and tobacco is incredibly unwise and damages our parliament’s integrity.”

The Campaign Against Arms Trade called for the Scottish Parliament to put its money where its mouth is. “It must stop investing in destructive industries like arms, tobacco and fossil fuels,” said the campaign’s spokesman, Andrew Smith.

“Public money should be used for public good, not to support companies like Meggitt and Ultra Electronics that profit from war, instability and conflict.”

MSP pension investments were “shocking”, according to the anti-tobacco campaign, ASH Scotland, “There is no way to reconcile the Scottish Government ambitions for a healthier, wealthier and fairer Scotland with any financial interest in tobacco companies,“ said the group’s chief executive, Sheila Duffy.

The new figures were compiled by Friends of the Earth Scotland. “Pensions exist to sustain us for the future so MSPs should challenge their pension fund to contribute to a future that’s worth living in,” urged the environmental group’s Ric Lander.

He is hosting a visit to Scotland this weekend by two activists from Colombia, who blame the oil and gas mining giant BHP Billiton for blighting their communities. “The story of coal mining in Colombia has been 30 years of destruction, 30 years of sadness, 30 years of pain,” said Samuel Arregoces, a villager from Tabaco evicted to make way for opencast coal mining.

“The little land we have left is contaminated. We cannot live a healthy life – the water, rivers and streams are polluted. We are uprooted.”

BHP Billiton pointed out that it was only a one third shareholder in the Cerrejón mine in the La Guajira region of Colombia. But it insisted that it listened to the concerns of the local community.

“There are many parts of the community that support the further development of the mine and the economic contribution and relatively high-paying jobs it brings – and there are others who are less convinced by that,” said the company’s chief executive, Andrew Mackenzie.

“We will keep trying to facilitate the discussions and agreements between different parts of the community, between the operators of Cerrejón and the municipality, in order that we can improve matters more quickly than is happening at the moment.”

Mike Tholen, economics director at the industry body, Oil & Gas UK, stressed that daily life depended on ready access to energy. “Oil and gas will be needed to supply at least 50 per cent of global energy demand in 2035,” he said.

Divestment of oil and gas is not the solution and will only make the challenge of meeting global energy demand all the greater.”

A spokeswoman for the arms industry body, Aerospace Defence Security, pointed out that the industry made vital contributions to national security and national prosperity.

The Tobacco Manufacturers’ Association insisted that it ran a “legitimate” business that people could choose to invest in. “Fund managers are free and indeed required to make the best financial decisions for their investors,” said an association spokesman.

“Many commentators would point to the tobacco industry’s strong financial performance in recent years as a reason why its shares are considered an attractive buy for pension funds.”

Jonathan Isaby, chief executive of the right-wing Taxpayers’ Alliance, went further. “These investments only seem to be questionable in the eyes of the self-appointed high priests of morality from taxpayer-funded charities, and they seem to forget how crucial it is for people to get a decent pension in their old age,” he said.

A spokeswoman for the Scottish Parliament said: “The parliamentary pension scheme is part of a pooled fund run by the independent manager Baillie Gifford which takes the investment decisions. The parliament is only one of a large number of investors in the fund and cannot therefore direct where investments are made.”

Where MSP pension funds are invested

Company DescriptionValue in 2013 Value in 2015 Change
Meggitt UK based arms company, top 100 globally£179,067£154,234-14%
Rolls-RoyceUK based arms company, 14th biggest globally£0£244,517100%
Serco GroupUK based arms company, top 100 globally£133,486£0-100%
Ultra ElectronicsUSA based arms company, top 100 globally£123,719£188,09035%
Fossil Fuels
AlcoaCoal company, top 100 globally£0£17,408100%
Peabody EnergyCoal company, 10th biggest globally£0£17,408100%
Rio TintoCoal company, top 100 globally£250,694£233,232-7%
ApacheOil and gas company, top 100 globally£133,486£97,807-27%
BG GroupGas company, top 20 globally£397,203£357,371-10%
CNOOCOil and gas company, top 20 globally£68,371£60,189-12%
EOG ResourcesOil and gas company, top 100 globally£179,067£165,519-8%
Linn EnergyOil and gas company, top 100 globally£0£17,408100%
Royal Dutch ShellOil and gas company, 8th biggest globally£296,274£236,994-20%
TotalOil and gas company, 11th biggest globally£260,461£229,470-12%
PetrofacUK based oil and gas services company£153,021£116,616-24%
Premier OilUK based oil and gas company£107,440£48,903-54%
Snam Rete GasItaly based oil and gas services company£12,772£75,236489%
Wood GroupUK based oil and gas services company£188,834£195,6144%
BHP BillitonOil and gas, and 6th biggest coal company globally£374,413£270,850-28%
British American TobaccoUK-based multi-national tobacco company£426,505£372,419-13%
UK-based multi-national tobacco company£312,553£0-100%
Japan-based multi-national tobacco

Data: Scottish Parliament, Friends of the Earth Scotland

Holyrood images both published under the OSGL license.

A version of this story was published in the Sunday Herald on 25 October 2015.

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