Brent Pension Fund loses £8m from failure to divest from fossil fuels - but others fare worse and the Council is making progress

 

Simon Erskine campaigning outside City Hall

Divest Brent, the campaign calling on the Council to sell their holdings in fossil fuel companies like Shell, BP and ExxonMobil, received a boost after submitting a Freedom of Information request to the Council. In responding to this request the Council admitted that over the last year the Pension Fund was worth £8 million less as a result of not having divested the Fund from fossil fuel investments before the Covid pandemic. The Council is actually doing significantly better than many authorities – over the last 4 years local authority pension funds have lost £2 billion of value in fossil fuel stocks. 

 

Up until now the leading argument against divestment had been the consistently high returns from these investments. Divest Brent Co-ordinator, Simon Erskine, said that historically it was true that fossil fuel companies had been a key part of any pension fund – and indeed any investment portfolio – due to the high level of returns:

 

The world has moved on and now not only do many people think that it is inappropriate to lend support, through investment, to fossil fuel companies but the entire economic situation has changed, with plunging share values. If we are to meet the net zero by 2050 target (i.e. reduce carbon emissions by 2050 so that they are no more than the amount absorbed by planting trees and other means) we have to make dramatic reductions in the amount of fossil fuels that we burn – and ultimately stop burning them altogether. 

 

If governments fail in their duty to bring about those cuts through legislation then fossil fuel companies are also facing a world where electric vehicles are rapidly catching up with, and set to overtake, petrol and diesel vehicles; and where renewable and nuclear energy are rapidly taking over from fossil fuels as the main generators of electricity.

 

In the meantime Divest Brent has been increasing its support base through its petition, which now boasts nearly 1,400 signatories – including well over 1,100 Brent residents. 

 

Simon Erskine praised the action taken by the Council to date:

 

Not only has the Council changed its investment policy by recognising the risks of fossil fuel investments but it has also made a specifically low carbon investment as part of its Stock Market holdings – as well as making investments in renewable energy as part of its loan-stock holdings. We warmly welcome these developments – but the low carbon investment represents only 3% of the Pension Fund’s total investments. 

 

The Council has suggested that more money could be invested in the low carbon fund but there is no commitment to do so, despite it having committed to divest as part of its resolution last year to declare a climate and ecological emergency. It is not only Divest Brent that is looking for the Council to divest – more than half of the Councillors want the same thing.

 

Divest Brent is working with sympathetic councillors and is hopeful that, with the Council currently consulting on its ambitious Climate Emergency Strategy, divestment will be seen as a key part of that strategy.

 

Public urged to support divestment of Brent's pension fund from fossil fuels - sign the petition

A meeting at City Hall on March 6th will bring together councillors and council officers from across London to consider the practicalities of divesting local authority pension funds from fossil fuels. Brent Labour Party's local election manifesto pledged to start the process and other London boroughs have made similar pledges.

Bringing together people from different boroughs is important as council have shifted pension fund investments  into a cross borough Common Investment Vehicle (CIV). Investment decisions will vary borough to borough as their pension funds will be in different positions in terms of the value of their investments versus pension commitments. Some will be looking for a high return to top up funds, with an associated risk, while others will be in a strong position and happy with lower returns on more risk-free investments.

Fossil Free Brent - non-party political campaign has been gathering signatures on a petition setting out the case for divestment and recommended actions by Brent Council:

The petition is below. You can sign it HERE

Brent Council should divest its pension fund from fossil fuel companies to protect the people of Brent. So we ask Brent Council to make a public divestment statement committing the Brent Pension Fund to:

1. Immediately freeze any new investment in the top 200 publicly-traded fossil fuel companies with largest known carbon reserves (oil, coal and gas) [0]

2. Divest from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds in the top 200 list and shift these funds to lower risk, ethical investments before the May 2022 Council elections

3. Advocate to other pension funds, including the London Pension Fund Authority and Local Government Pension Scheme members to do the same

4. To do the above in a timely manner - by setting up a working group to report back on a strategy to bring about divestment within three months from the submission of this petition

Why is this important?

We believe divestment from fossil fuels to be not only ethically and environmentally correct, but also financially prudent.

Climate change is the greatest challenge humanity has encountered. The 20 hottest years on record have all occurred since 1981 and 2016 was the hottest ever [1]. Higher average temperatures are directly linked to extreme weather events such as heat waves, droughts, floods and storms.

Scientists have unanimously concluded that these changes are a consequence of human activity, arising from the burning of fossil fuels [2]. Moreover, this activity has resulted in unprecedented levels of air pollution, now regarded as a major world killer [3].

In a speech at Lloyd’s of London in September 2015, Mark Carney, Governor of the Bank of England said that by the time ‘climate change becomes a defining issue for financial stability, it may already be too late’. Carney warned investors that policies to address climate change ‘would render the vast majority of reserves ‘stranded’ – oil, gas and coal that will be literally unburnable’ [4].

In order to continue developing fossil fuel reserves – particularly in the difficult areas where the remaining reserves are located (including the Arctic, the mouth of the Amazon and tar sands in sensitive areas) the developing companies need investment – divestment is a way of cutting off the funds needed to carry out these damaging activities. It also sends a powerful signal to the companies and others that it is time to move away from fossil fuels towards renewable energy.

References:
[0] http://tinyurl.com/lmskfgk
[1] http://tinyurl.com/y9tkm4sn
[2] http://tinyurl.com/3e3zv
[3] http://tinyurl.com/pqgdd5q
[4] http://tinyurl.com/ycspl5

Will Brent Council follow Lambeth in fossil fuel divestment?

Cross-party and non-party campaigners for disinvestment

The Fossil Free Brent campaign will hopefully get a boost from the decision of Lambeth Council to end its pension fund investments in fossil fuel companies. Disinvestment makes sense not just in terms of fighting climate change but also in moving out of shares that will inevitably decline long-term as the climate crisis intensifies and there is a move to alternative energy production.

Brent Labour included disinvestment in its election manifesto and the council is believed to be looking at ways to implement the policy. Implementation is quite complex as investments need to be identified, often inside larger management funds, and Brent's has substantial funds invested via  the London-wide Collective Investment Vehicle, where control involves many boroughs.  Brent Council will need to join other boroughs, such as Lambeth,  in changing CIV investment policy.

THE LAMBETH STATEMENT

In Lambeth Labour’s 2018 manifesto we pledged to work towards divesting from fossil fuels, and invest our pension fund in a socially and financially responsible way. This was particularly thanks the tireless campaigning of my fellow Labour councillors and lobbying from local groups such as the Advocacy Academy.

Today, just a few months after we made that manifesto promise, we have clearly set out how we will implement it.

Firstly, pensions committee has unanimously agreed to sell over £200m of global equities investments and reinvest the money in a low carbon alternative. Several suitable alternatives have been identified – council officers have been asked to research them in more detail and a final decision as to where the money will be reinvested will be made at the next pensions committee meeting.

Secondly, pensions committee has unanimously agreed in principle to sell down its remaining global equities investments and reinvest the proceeds as soon as a suitable alternative becomes available within the London Pension Collective Investment Vehicle framework (the collective pensions body for London councils). Several suitable alternatives have been identified, and we will lobby the London CIV to include them or similar funds within its framework.

Finally, pensions committee has unanimously agreed in principle to sell down its remaining equity investments (these are in emerging markets), and reinvest the proceeds as soon as a suitable alternative becomes available within the London CIV framework. A suitable alternative has been identified, and we will lobby the London CIV to include it or a similar fund within its framework.

We believe this is the first time any UK local government pension fund has set out a clear roadmap, within its existing actuarial framework, that will allow it to fully divest all its shares and reinvest in low carbon alternatives. Crucially we are able to do this while fully protecting Lambeth council pensioners, current and future.

Lambeth is leading the way on the divestment agenda, with a clear plan to achieve our manifesto promise. Many pension funds now have policy in favour of divesting from carbon intensive fossil fuel shares, but we believe we are the first to set out exactly how we will do this. We will now focus on lobbying the London CIV to include at the earliest opportunity the funds that will allow us to complete our divestment process.

When it comes to action on climate change Lambeth walks the walk, we don’t just talk the talk. This is what happens when Labour is delivering in power rather than shouting on the sidelines like our opponents. I’m grateful to my fellow committee members and councillors who have lobbied on this issue for helping to make this a reality.

Councillor Iain Simpson, Chair of Lambeth Pensions Committee

-->The Divest Brent campaign has a Facebook site HERE and urge the public to support their petition HERE.

This is the text of the petition to Brent Council:
Brent Council should divest its pension fund from fossil fuel companies to protect the people of Brent. So we ask Brent Council to make a public divestment statement committing the Brent Pension Fund to:
1.  Immediately freeze any new investment in the top 200 publicly-traded fossil fuel companies with largest known carbon reserves (oil, coal and gas)
2.  Divest from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds in the top 200 list and shift these funds to lower risk, ethical investments before the May 2022 Council elections
3.  Advocate to other pension funds, including the London Pension Fund Authority and Local Government Pension Scheme members to do the same
4.  To do the above in a timely manner - by setting up a working group to report back on a strategy to bring about divestment within three months from the submission of this petition

Why is this important?

We believe divestment from fossil fuels to be not only ethically and environmentally correct, but also financially prudent.

Climate change is the greatest challenge humanity has encountered. The 20 hottest years on record have all occurred since 1981 and 2016 was the hottest ever . Higher average temperatures are directly linked to extreme weather events such as heat waves, droughts, floods and storms.

Scientists have unanimously concluded that these changes are a consequence of human activity, arising from the burning of fossil fuels. Moreover, this activity has resulted in unprecedented levels of air pollution, now regarded as a major world killer.

In a speech at Lloyd’s of London in September 2015, Mark Carney, Governor of the Bank of England said that by the time ‘climate change becomes a defining issue for financial stability, it may already be too late’. Carney warned investors that policies to address climate change ‘would render the vast majority of reserves ‘stranded’ – oil, gas and coal that will be literally unburnable’ .

In order to continue developing fossil fuel reserves – particularly in the difficult areas where the remaining reserves are located (including the Arctic, the mouth of the Amazon and tar sands in sensitive areas) the developing companies need investment – divestment is a way of cutting off the funds needed to carry out these damaging activities. It also sends a powerful signal to the companies and others that it is time to move away from fossil fuels towards renewable energy.

Brent Council urged to end pension fund investment in Fossil Fuels - how you can support the campaign

Green Party London Assembly Members Caroline Russell and Sian Berry with Brent Green Simon Erskine

Climate change campaigners are urging Brent Council to take its money out of fossil fuels.

A new campaign group, Divest Brent, launched this week. The activists hope to put pressure on the Council to “divest” from the fossil fuel industry by withdrawing any money they have invested in companies involved in digging for or burning coal, oil and gas.

Industry

Recently published figures indicate that the Council has over £37 million invested in the fossil fuel industry through its pension fund.

Campaigner and Green Party activist Simon Erskine explained that the divestment movement had already scored many victories in recent years and has become a powerful method of forcing organisations to consider their contribution to human-made climate change.

He told Wembley Matters: 

It sends a message to the industry and it raises awareness of the issue.

People may not already be aware of where their money is going and might be concerned to learn they are helping to finance the fossil fuel industry.

Fossil fuels belong to the past; they are not the answer to climate change, they are the problem.

In the same way, people no longer want to invest in tobacco or the arms trade.

Earlier this month a protest was staged outside City Hall to call for the Greater London Authority to divest from fossil fuels. The London Assembly has already passed a motion requesting the London Mayor to do exactly that.

Organisations in the UK that have committed to fossil fuel divestment so far include Oxford and Bristol city councils, the University of Glasgow and the British Medical Association. A number of London Boroughs have also committed – including neighbouring borough, Hammersmith & Fulham.

Globally more than 800 institutions (from government, faith-based, philanthropic and educational organisations etc), representing well over $5 trillion in assets, have committed to divest.

Ali Warrington, another Divest Brent campaigner, said:

It’s really exciting to bring the fastest-growing divestment movement in history to Brent. We need to act locally and ensure our representatives do what’s right and invest ethically. The companies they’re investing in are creating devastating climate change, and are insecure investments financially.

To support the campaign sign the petition HERE and email, Facebook and Tweet your friends urging them to sign.

This is the petition:

Brent Council should divest its pension fund from fossil fuel companies to protect the people of Brent. So we ask Brent Council to make a public divestment statement committing the Brent Pension Fund to:

1. Immediately freeze any new investment in the top 200 publicly-traded fossil fuel companies with largest known carbon reserves (oil, coal and gas)
2. Divest from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds in the top 200 list and shift these funds to lower risk, ethical investments within 5 years
3. Advocate to other pension funds, including the London Pension Fund Authority and Local Government Pension Scheme members to do the same
4. To do the above in a timely manner - by setting up a working group to report back on a strategy to bring about divestment within three months from the submission of this petition

Why is this important?

We believe divestment from fossil fuels to be not only ethically and environmentally correct, but also financially prudent.

Climate change is the greatest challenge humanity has encountered. The 20 hottest years on record have all occurred since 1981 and 2016 was the hottest ever [1]. Higher average temperatures are directly linked to extreme weather events such as heat waves, droughts, floods and storms.
Scientists have unanimously concluded that these changes are a consequence of human activity, arising from the burning of fossil fuels [2]. Moreover, this activity has resulted in unprecedented levels of air pollution, now regarded as a major world killer [3].

In a speech at Lloyd’s of London in September 2015, Mark Carney, Governor of the Bank of England said that by the time ‘climate change becomes a defining issue for financial stability, it may already be too late’. Carney warned investors that policies to address climate change ‘would render the vast majority of reserves ‘stranded’ – oil, gas and coal that will be literary unburnable’ [4].

In order to continue developing fossil fuel reserves – particularly in the difficult areas where the remaining reserves are located (including the Arctic, the mouth of the Amazon and tar sands in sensitive areas) the developing companies need investment – divestment is a way of cutting off the funds needed to carry out these damaging activities. It also sends a powerful signal to the companies and others that it is time to move away from fossil fuels towards renewable energy.

References:
[1] http://tinyurl.com/y9tkm4sn
[2] http://tinyurl.com/3e3zv
[3] http://tinyurl.com/pqgdd5q
[4] http://tinyurl.com/ycspl5sg