Call for pension funds to be included in carbon neutral drive
WELSH Labour MS Jack Sargeant has called on the Welsh Government to include public sector pension funds in its drive to achieve a carbon-neutral Wales by 2030.
Mr Sargeant is a supporter of the campaign to get the pension funds to disinvest from companies involved in the exploitation of fossil fuels.
In an article for the Fabian Society’s members’ magazine, he states: “Pension regulations are not devolved, but this does not mean we cannot take a view.
“Local government pension funds in Wales invest significant sums in companies drilling for oil and gas. Fossil fuel disinvestment means moving money out of these investments, whether that’s in the form of stocks and shares or bonds. There is a growing movement to make this change and we successfully campaigned to disinvest the fund of the Senedd Members’ pension scheme.
I support calls to disinvest local government pension schemes and believe the Welsh Government must show strong leadership to encourage and help make this possible.
“One way of doing this is to include pension fund investments in targets for the public sector to be carbon neutral by 2030. This would be a bold ambition and set the unmistakable tone that we recognise change needs to happen, and fast. It would also send a message to those that create the investment products the funds purchase. This sounds small but is absolutely crucial; these products need to exist if funds are going to disinvest.
“The campaign to disinvest local government pensions has already done so much and I pay tribute to organisations like Friends of the Earth Cymru who have led this campaign.
“Now however, it is time to step up the progress, and for that to happen we need political leadership that, in my view, must come from the top. Councils of all political stripes have not always been fast enough to grasp the imperative nature of this and that is why I want to place a duty on them to act. Investment managers have also not understood the need for the creation of new investment products, but that will change if we send this clear signal.
“Time is one thing we do not have a lot of, and I am pleased that we have real focus on the need for change and I welcome the Welsh Government’s announcement on the steps it will take for Wales to become carbon neutral, but this seemingly small additional step could reinvest billions from products that are part of the problem to investments that are part of the solution. Pension funds must be part of the 2030 targets.”
In a letter to Welsh ministers, Friends of the Earth Cymru stated: “Pension funds are legally entitled to invest in infrastructure projects, so it makes sense for Welsh Government, the eight local authority pension funds, the Welsh Local Government Association and other stakeholders to work together on a strategy to encourage pension funds to invest in infrastructure projects within Wales.
“This would help create new jobs, boost the Welsh economy, provide a sustainable and suitable rate of return for pension fund holders as well as reducing the fossil fuel investments of pension funds.
“A win-win-win situation is within grasp if all parties work together.
“If we don’t act now and catastrophic climate chaos really takes hold, there won’t be a future left worth retiring into.”
Responding to a question from Mr Sargeant, Climate Change Minister Julie James said: “I think we absolutely need to make sure that the public sector across Wales, including its pension funds, deinvest from deforestation and oil and gas exploration as fast as possible.
“I will certainly be working alongside my colleague, [Finance Minister] Rebecca Evans, to put pressure on the UK Government to make sure that we do invest UK pension funds in the right way.
“You are absolutely right in identifying it as being outside of our competence, but nevertheless we are happy to bring our influence to bear in that regard.”