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Campaigners ‘shocked and angered’ as local government pension fund vote against divesting from fossil fuels

Campaigners say they are in ‘a state of shock and anger’ after the Shropshire County Pension Fund yesterday voted against divesting from fossil fuels.

Protesters outside Shirehall in Shrewsbury
Protesters outside Shirehall in Shrewsbury

Over the last two years, Fossil Free Shropshire has shown the pension fund committee that divestment will be financially beneficially to the fund’s 50,000 pensioners and will help the fight against climate breakdown. 

Over a thousand people from Shropshire and Telford & Wrekin and beyond contacted the pension fund committee in advance of the vote. A protest was also staged outside Shirehall in Shrewsbury as the vote was made.

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Fossil Free Shropshire says the fund’s annual emissions profile is 14,000 tonnes/CO2 a figure which Shropshire Council does not include in its 2030 net zero pledge, even though it represents the equivalent of 40% of the council’s current corporate emissions.

Jamie Russell, a spokesperson for Fossil Free Shropshire said: “We have been left in a state of shock and anger by this vote. The Pension Committee has ignored all the evidence that divesting from fossil fuels would be financially better for the fund’s profits and would help Shropshire meet its 2030 net zero pledge.

“This vote makes it painfully clear that Shropshire is not the climate leader it claims to be. Councillors with pensions invested in companies like BP and Shell have now lost all moral authority to talk to Shropshire and Telford & Wrekin businesses and residents about the need to rapidly cut their emissions to avoid climate catastrophe. By voting to stay invested in fossil fuels until 2050, the Shropshire County Pension Fund has raised two fingers to our children and grandchildren, and to the financial prospects of the 50,000 pensioners who the fund represents.”

Campaigners say that Shropshire Council’s decision to stay invested in fossil fuels will leave the fund financially exposed to the volatile oil and gas market. Pension funds across the world are increasingly abandoning fossil fuel investments over fears that they may become worthless as the world moves towards net zero, creating a ‘rush for the exits’.

Says Jamie Russell: “The Pension Committee is completely out of touch with reality. It cannot financially or morally continue investing in companies that are extracting oil and gas reserves incompatible with a 1.5C world. Our climate is already unravelling. Heatwaves of 45C are currently devastating Argentina’s critical grain-producing region. Arctic ice is melting at a rapidly increasing rate. A report commissioned by the Met Office predicts the collapse of society within our lifetime as climate breakdown hits.

“Meanwhile, the fund is losing money through its refusal to divest. Over the last ten years investors in renewables tripled fossil fuel performance. If the committee was really doing its “fiduciary duty”, it would be divesting as a matter of urgency.

“We do not believe that the pension fund’s 50,000 members want their savings invested in companies that are financially volatile and wrecking the planet for their children and grandchildren. The fact that the fund didn’t consult them properly before taking this vote is an insult. We will continue to fight for the Shropshire County Pension Fund to pursue the bigger profits and brighter future offered by renewables.”

Thomas Biggins, Chair of Shropshire Council’s Pensions Committee, said:

Pensions Committee members agreed that targeting net zero would have the greatest overall impact on real world emissions, decarbonising the investment strategy, managing climate risk, and ensuring the Fund keeps pace with the transition to the low carbon economy.

“This is because net-zero is an all-encompassing target that considers scope 1, 2, and when possible scope 3, emissions from all companies, regardless of sector. Noting that only 13% of the Fund’s total equity carbon footprint is attributable to holdings in energy stocks, with companies in the industrials, materials and utilities sectors contributing 68% (based on analysis from the Fund’s 2021 Climate Risk Report).

“Furthermore, as a material first step to achieving the net-zero objective, Pensions Committee members agreed two immediate changes to the way the Fund’s equities are managed. Both changes will have a material impact on the carbon footprint of the Fund and the type of companies invested in.”

Members agreed to move c.£130m out of UK equities into two Sustainable Equity managers. These managers will invest in companies that enable the green transition alongside other companies that contribute to one or more of the UN’s Sustainable Development Goals (SDGs).

Members also agreed to move c.£700m out of a FTSE Developed index tracker with L&G into the Solactive L&G Low Carbon Transition Global Index fund. This change will reduce the carbon footprint of these assets by c.50% with a further 7% per annum reduction built in until net-zero in 2050, together with increasing exposure to companies that are enabling the green transition.

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