FRIENDS of the Earth Scotland, have accused Dumfries & Galloway Council in a damning report of investing heavily in the companies most responsible for climate change whilst failing to invest in green infrastructure.
In The Report they state “The investments are held through the council’s pension fund and should be invested for the long-term benefit of pension fund members. Oil, gas and coal companies are financially risky as government action on climate change threatens their long-term viability.”
The report found that Dumfries & Galloway Council:
* Invested £70.5 million in fossil fuel stocks or 10.2% of their pension fund: the highest proportion in Scotland
* Have not invested any of their pension fund in renewable energy
* Offered no evidence of having discussed how climate change affects their investment strategy
* Scottish Council Pension Funds in total have £1.7 billion invested in fossil fuel stocks and shares
Dumfries & Galloway Council invest £7.7 million in BP, who are drilling for oil in the Arctic and fracking, as well as having a history of campaigning against subsidies for renewable energy, and £12.9 million in Shell, who are fracking in North America and accused of being responsible for a series of spills in Nigeria.
The report found that, in contrast with other Scottish councils, Dumfries & Galloway were not investing any of their pension fund in renewable energy or social housing projects.
Ric Lander, Divestment campaigner at Friends of the Earth Scotland and report author commented:
“Council pension funds have huge clout and can shape our future. It’s time they used this power to invest in a future worth living in.
“Only three councils have any investments in social housing and renewable energy in Scotland despite strong returns available and many local benefits of these schemes. The majority of council pensions are invested in stocks and shares, which bring few tangible local benefits.”
“Divesting from fossil fuels is an opportunity to contribute to a brighter future. That would be good news for Dumfries and Galloway pension fund members and good news for all of us. With Scotland going to the polls for local elections in May we want to see prospective councillors getting serious about responsible investment.”
UNISON’s Scottish Organiser Dave Watson commented:
“Too many of our pension funds are investing in obsolete technologies and risking our members hard earned contributions. The future of energy is green, and it is within sight. Our pension funds need to be part of the future, not the past.”
Five local council pension funds in the UK have committed to cut their fossil fuel investments: Haringey, Waltham Forest, Southwark, the Environment Agency Pension Fund, and South Yorkshire. None of the councils that have divested are in Scotland, questioning Scotland’s claim to be leading on climate change.
Across the world 701 institutions, with total investments valued at $5.5 trillion USD, have committed to divest from fossil fuels .
Fossil fuel investments by council pension fund:
Council pension fund / Fossil fuel investments / As a proportion of fund Dumfries & Galloway / £70.5m / 10.2% Shetland / £30.8m / 8.2% Falkirk / £119.6m / 6.5% Highland / £92.3m / 6.3% Strathclyde / £889.8m / 5.5% Fife / £89.6m / 4.8% Tayside / £131.1m / 4.5% Scottish Borders / £23.3m / 4.3% North East / £124.1m / 3.8% Orkney / £8.2m / 3.1% Lothian / £104.3m / 1.7% TOTAL / £1,683.3m
A spokesperson For Dumfries and Galloway Council said;
“As at 31 December 2016, an estimate of 7.3% in “energy” but this is not necessarily investment in fossil fuels.
£30.5m can be identified as specific holding in oil companies but it is not possible to identify individual companies within pooled investments, therefore no way of knowing whether they also invest in renewable energy .
The press release from Friends of the Earth states that the Pension Fund had 10.2% of its £692m assets invested in fossil fuel companies, which equates to some £70.6m. The figure of £692m was the fund value at 31 March 2016, and appears in the Annual Accounts, however it is unclear where the figure of 10.2% (or £70.6m) in fossil fuels comes from and may simply be an estimate based on the fact that energy equities have made up around 10% to 12% of the FTSE All Share Index. However they have applied this to the total value of the funds’ assets as opposed to actual amount held in equities.
The principal objective of the Dumfries and Galloway Council Pension Fund is to ensure that scheme members and their dependants receive all benefits as and when they become payable. The Fund has considered socially responsible investment in the context of its legal and fiduciary duties and obligations.”
Council Leader Ronnie Nicholson said;
“Although the figures in report about Dumfries and Galloway don’t appear to be accurate , I still welcome this report . Pension fund managers are legally obliged to protect the pensions of their members but that can be done in a way that also factors in ethical and environmental principles and that’s what I would encourage them to do.
The public however may have a different view as to whether a British oil company that employs thousands of people across the UK including people in Dumfries and Galloway at local petrol stations are a valid investment or not for any pension fund. Ultimately it is up to the pension fund members and their representatives on the pension sub committee to decide the relevant policy.”