UK Parliament’s pension fund steps up renewables investment but MPs insist full divestment

pension fund

Parliament’s pension fund has been called upon to divest from fossil fuel assets, after its latest annual report revealed that the fund is still heavily reliant on fossil fuel majors

MPs and peers have today again called on Parliament’s pension fund to divest from fossil fuel assets, after its latest annual report revealed that despite an uptick in green investments the fund is still heavily reliant on fossil fuel majors.

The cross-party Divest Parliament initiative today responded to the recently released annual report from the Parliamentary Contributory Pension Fund (PCPF), which revealed that the fund has significant increased its interest in low carbon assets while reducing its exposure to some high carbon businesses.

The report shows that the fund’s holdings in fossil fuel companies have decreased due to the use of ‘low-carbon’ investment vehicles, while for the first time five per cent of the fund’s investments are dedicated to renewable infrastructure.

However, while the fund’s holdings in carbon intensive companies have fallen, it still retains an £8m stake in Royal Dutch Shell and £4.4m in BP PLC.

As such, the group of 360 serving and former MPs, including all Labour leadership candidates, the leaders of the Liberal Democrats and the SNP and a number of senior Conservatives, has again called for the trustees of the PCPF to join more than 1,000 financial institutions worldwide in divesting fully from fossil fuels.

Investing in clean energy is clearly the right thing to do, financially and for the future of our planet, so I’m glad the Parliamentary Pension Fund is doing this, said Caroline Lucas, Green Party MP for Brighton Pavilion. But it has to also stop investing in Shell and BP. Parliament declared a climate emergency nearly a year ago, and the parliamentary pension fund needs to fall into line with this by ending the support for fossil fuels.

Her comments were echoed by Zarah Sultana, Labour MP for Coventry South, who said the coronavirus pandemic was “showing the devastating effects a major crisis can have to all areas of society”.

The climate crisis risks being even worse – unless we take urgent action, she said. Transitioning our economy away from fossil fuels is paramount and Parliament must lead the way, which is why I joined the Divest Parliament initiative as a newly elected MP. My pension shouldn’t be used to fuel the climate crisis and I call on the trustees of our MP pension fund to divest fully from fossil fuel companies.

The Trustees have repeatedly resisted calls to fully divest, pledging instead to develop a new “Climate Change Investment Policy”.

Some leading investors have argued that such policies are a more effective means of driving the decarbonisation of carbon intensive industries, noting how investor pressure has helped drive the development of more ambitious clean tech and climate plans from companies such as BP and Shell.

However, the Divest Parliament campaign noted that the promised PCPF policy has been delayed and no publication date has been confirmed as yet.

A Spokesperson for the PCPF defended the fund’s investment strategy. In common with most large diversified investors, the PCPF currently has financial exposure to a very large number of companies and sectors, they said. As set out in their Annual Review 2019, the Trustees have made a number of changes to their investment strategy reflecting the Fund’s long term objectives and their beliefs. The Trustees have committed to global renewable infrastructure in 2019 and in February 2020, they reviewed the Fund’s equity structure and have made these changes to increase focus on the long term sustainability of returns.

However, Mark Campanale of the Carbon Tracker think tank argued there were compelling financial reasons for adopting a more aggressive divestment strategy.

2020 must mark a decisive turning point where trustees of private and public pensions funds stop fuelling the fire of the climate crisis through their business-as-usual investments in fossil fuel majors, he said. Some of these companies present grave risks to people’s pensions as coal, oil and gas risk becoming ‘stranded assets’ as countries align policy with containing global heating to 1.5 degrees and the cost of clean energy continues to plummet. Even the Bank of England now plans to exclude fossil fuel assets from its purchases.

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