Strathclyde Pension Fund’s (SPF) fossil fuel investment has increased by nearly £220 million in just one year, according to a report by Friends of the Earth Scotland (FoES) which prompted claims the fund is hiding controversial investments.
Ahead of the COP26 climate summit in Glasgow, FoES has examined SPF’s investments in oil and gas companies. It estimates the fund’s exposure to fossil fuels has risen from £618m in 2020 to £836m in 2021, despite calls for divestment in the face of a climate emergency.
Critics of SPF say the study points to a “worrying trend of fossil fuel industry investments hidden away in pooled funds”. SPF says “we don’t recognise the figures being quoted” and claims its investment in oil and gas is “less than half” the amount it was five years ago.
FoES looked at new data on the SPF website and revised an assessment it made earlier this year of the fund’s investment in oil and gas.
The environmental group claims that in 2020 SPF had £173m directly invested in fossil fuels and £445m indirectly, giving a total exposure of £445m. The figures for this year are £138m directly invested and £698m indirectly, amounting to £836m in total.
FoES claims its assessment shows that whilst SPF’s direct holdings decreased during the 2020-21 financial year, a “huge increase in arms-length” investment by the fund means that “total fossil fuel exposure has likely increased”.
The group welcomed SPF publication of a list of its investments online, including details of direct investments in oil and gas. But it argued it was “misleading” to suggest that directly held investments in oil and gas represented the only exposure the fund had to fossil fuels.
FoES challenged the SPF to come up with its “own thorough assessment” of direct and indirectly held investments in the oil and gas sector.
Ric Lander, of FoES, said: “Through its pensions Glasgow City Council invests far more money in fossil fuels than any other Scottish council. A clean-up has been floated and the rhetoric is encouraging, but the toxic puddle of money keeps growing.”
He added: “We, as citizens and pension fund members, must speak out against this mess. On 8 September city councillors are due to discuss a plan to actually divest from fossil polluters. We are watching.
“With world leaders booking their hotels for November’s UN climate talks, now is the moment for Glasgow City Council to be bold and do the right thing. In 2021 Scotland can leave fossil polluters behind on our way to a just transition to a sustainable future.”
Divest Strathclyde, which campaigns for divestment from fossil fuels, said: “This new report points to a worrying trend of fossil fuel industry investments hidden away in pooled funds. If the Strathclyde Pension Fund is going to follow through with a commitment to divest from climate-wrecking companies then it must take responsibility for these indirect investments as well as the direct ones, otherwise the climate criminals will be able to carry on with business as usual and undermine global climate efforts.”
A spokesman for SPF said: “It’s welcome that FoES recognises that our direct investments in industries like oil and gas are already decreasing. They are also dwarfed by our investments in clean, renewable energy.
“We don’t recognise the figures being quoted for passive investment – but, even leaving that aside, there is a difference between the value of existing investments increasing and the fund making additional investments.”
SPF has published its own assessment of exposure to oil and gas. “Earlier this year, it had fallen to £316 million – less than half of what it was just five years ago,” added the spokesperson.
“Strathclyde Pension Fund is one of the first large pension funds to approve divestment as a tool to address firms that do not engage with the climate crisis.”
In April, as reported by The Ferret, SPF was accused of a lack of transparency over its investments by switching from direct shares in “problematic” companies into a type of holding called pooled funds.
The Scottish Palestine Solidarity Campaign (SPSC) made the claim after it emerged the fund no longer directly invests in arms firms at the centre of divestment campaigns. Instead, the SPF has moved to pooled funds which means it still invests in these companies but indirectly.
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