Scottish pension funds are investing heavily in the
companies contributing to climate change, according to a report published by Scottish
think tank Common Weal, trade union UNISON Scotland, and environmental charity Friends
of the Earth Scotland.
According to the report, Scottish council pension funds have
£1.68 billion ($2.05 billion) invested in fossil fuels, which translates to
£3,300 for each pension fund. This is in contrast to £234 million invested renewables
and social housing across all funds.
“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,”
said Friends of the Earth Scotland’s Ric Lander, who authored the report.
“Divesting from fossil fuels is an opportunity to contribute to a brighter
future and put money back into local economies.”
The £1.68 billion represents 4.8% of the total value of the
plan. Approximately £637 million of this was directly invested by councils, of
which £543 million is invested in oil and gas, while £113 million is invested
in coal. Some £1.05 billion of the funds that Scotland’s councils hold in
fossil fuels is invested through intermediaries.
“Councils invest in companies such as BP, who are fracking
and drilling for oil in the Arctic as well as having a history of campaigning
against subsidies for renewable energy, and BHP Billiton, the 12th-largest
extractor of coal in the world,” said the report.
Because the value of fossil fuel companies is directly
linked to the amount of coal, oil and gas that companies can burn, the report
argues that any action that governments take to tackle climate change threatens
the future profitability of fossil fuel companies, and thus the pensions funds
that invest in those companies.
“There is a strong financial case to say that government
action on climate change makes fossil fuel investments inherently risky, and
that they should be avoided by long-term investors,” said the report. “The
future of pension funds is intrinsically linked with that of the wider economy.
They will not be able to escape the damage that fossil fuels will wreak on our
future economy. If this case is understood, divestment is simply an act of self
defense for investors.”
The report also found that only six of the 11 Scottish
councils that manage pension funds have ever discussed climate change at the
board level. And only three councils are known to be actively investing in
socially and environmentally beneficial infrastructure. The Strathclyde,
Falkirk and Lothian Pension Funds invest in renewable energy and social
housing, however, their combined investment represents just 0.7% of the
Scotland-wide plan’s value.
Scotland is divided into 32 council areas. The Scottish
Local Government Pension plan is worth £34.7 billion, and has more than 500,000
members. The plan’s advisory board estimates that 10% of Scots are a member of
the fund, and that 20% of the population have a financial interest in the fund.
“Too many of our pension funds are investing in obsolete
technologies and risking our members hard-earned contributions,” said UNISON’s
Scottish Organizer Dave Watson. “The future of energy is green, and it is
within sight. Our pension funds need to be part of the future, not the past.”
By Michael Katz