Council pension pot still has £57m in fossil fuels
CARDIFF and Vale pension fund still has £57m invested in fossil fuels – more than 18 months after Cardiff council voted for divestment.
The local government pension fund, as of March last year, had millions of pounds invested in companies such as Royal Dutch Shell, BP, Anglo American and ExxonMobil.
The data was recently revealed from research by environmental campaigners Friends of the Earth and Platform, who analysed local government pension funds across the UK. Across Wales, local government pension funds have £550m invested in fossil fuels.
Despite Cardiff council committing in 2019 to divest the pension fund from fossil fuels – due to concerns over climate change – the fund still has a long way to go.
However, Cardiff and Vale is ahead of some Welsh pension funds, with Dyfed having twice as much in fossil fuels.
Bleddyn Lake, spokesman for Friends of the Earth Cymru, said: “While some councils and pension funds have been more proactive than others, the fact that the eight local authority pension funds in Wales still invest a staggering £550m in fossil fuels is outrageous.”
Robert Noyes, campaigner and researcher at Platform, said: “After a decade of austerity and the devastating economic impact of Covid across the UK, local councils can and should be using their pension funds to support local investment priorities.
“Instead of making risky bets on fossil fuels, let’s channel the wealth in our pensions to local communities and build a better world beyond the pandemic.
“Whatever your stake in your pension – imagine what world you want to retire in – and push your pension to invest in it.”
Cardiff and Vale pension fund is making progress in divesting from fossil fuels. The fund has about £2bn assets in total, so the £57m is just 2.9% of its total assets.
Most of its investments in fossil fuels are indirect: £24.6m are in the Blackrock UK equity index fund, which invests in several companies, including some fossil fuel producers like Shell and BP. However, £16m is directly invested in fossil fuel producers.
The fund is planning to switch a lot of its money into low-carbon tracker funds, which exclude any companies who produce fossil fuels. But investment decisions like these take up a lot of time; while scientists and campaigners warn time is running out to limit climate change.
According to the campaigners’ research, the top 10 fossil fuel companies invested in by Cardiff and Vale are: £10.4m in Royal Dutch Shell; £6.8m in BHP; £6m in Mitsubishi; £5.6m in Mitsui; £5.2m in BP; £3.2m in
Anglo American; £2.8m in Glencore; £2.5m in Sumitomo; £1.7m in LG; and £1.3m in ExxonMobil.
Mr Lake said: “These pension funds, the Wales Pension Partnership and the Welsh Government should be sitting down to work out a plan to ditch fossil fuels and invest the money instead into projects in Wales to create jobs and give a good return on investment. “The time for action is now.” A Cardiff council spokesman said: “We are happy to see that Friends of the Earth has recognised the strides Cardiff and Vale pension fund has already taken to divest funds from fossil fuel investments.
“We are committed to the decarbonisation agenda and, while Cardiff council only administers the pension fund, we have made clear to our fund managers that divestment of fossil fuel funds is carried out as quickly as possible while protecting the interests of pension fund members.
“Right now, along with Vale of Glamorgan council, we have the thirdlowest investment portfolio – 2.9% of fund total – in this area of any local authority in Wales.
“In the past year alone the pension fund has invested about 10% of its value into the Blackrock low-carbon tracker fund, with this fund recently evolving to specifically exclude companies engaged in a number of carbon-intensive activities.
“While our commitment is clear, divestment is not a simple matter of flicking a switch.
“The pension fund is responsible for the livelihoods of thousands of current and former council staff. So far we have been able to take steps to lower our carbon exposure without impacting performance. This is really good news as we work towards our decarbonisation goals.
“As signatories to the United Nations Principles for Responsible Investing or the equivalent UK Stewardship Code, all the fund’s investment managers are expected to consider the full range of governance, reputational and regulatory issues arising when making investment decisions on behalf of the fund and to engage with companies on points of concern.
“The fund is also a member of the Local Authority Pension Fund Forum. The forum has participated in campaigns which led to BP and Royal Dutch Shell shareholders approving resolutions requiring the companies to publish more information on a range of climate change-related issues.
“Cardiff council’s capital ambition document also notes that the cabinet will work with the pensions committee to consider divesting council investments from fossil fuel companies.
“As stated earlier, Cardiff council doesn’t control the pension fund, we purely administer the scheme, but the cabinet has made representations to the fund with the intention to bring about this change and the fund’s committee has set out its ‘in principle support’ for divestment and this work is ongoing.”