More than 250 current and former members of the UK’s Parliament are calling for their pension fund, the Parliamentary Contributory Pension Fund (PCPF), to disclose its carbon-intensive investment, and to quickly phase out fossil fuel investments.
“We believe members of Parliament have a responsibility to act on climate change, and a unique opportunity to show leadership on climate action, responsible investment and the management of climate risk through addressing the practices of our own pension fund,” said the MPs in a signed pledge. “We call on the trustees to uphold their fiduciary duty and take the financial risks of climate change seriously.”
The MPs say they want the PCPF to quantify, disclose, and review the fund’s investments in carbon-intensive industries, engage in a dialogue with fund members and managers on responsible investment, and commit to phasing out fossil fuel investments over an appropriate timeframe.
“It’s time MPs joined the majority of UK universities, numerous faith groups and a growing number of local authorities,” Caroline Lucas, MP for Brighton Pavilion, said in a statement. “The climate emergency demands that all pension funds divest from fossil fuels and invest in positive solutions to the climate crisis.”
According to the PCPF’s own statement of investment principles, the fund’s investment managers are expected to take account of environmental, social, and governance (ESG)-related risks and issues as part of their investment analysis and decision-making process. They are also expected to incorporate reporting on ESG-related issues into their regular reporting, which includes information on voting and engagement, in addition to details on how they are assessing and managing ESG-related risks in relation to their respective mandates.
“The trustees take responsible investment factors into account when monitoring and selecting investment managers,” the fund says in the “responsible investment” portion of its statement of investment principles. “The trustees aim to be aware of, and monitor, financially material ESG-related risks and issues through its investment managers.”
Based on the pension’s most recent annual report from June 2018, the plan had total assets of £730 million ($925.1 million), and its largest equity holding is in oil and gas company BP, which made up 1.6% of the portfolio, or approximately £11.7 million. It also has 0.8%, or £5.8 million, in Royal Dutch Shell A shares, and 0.7%, or £5.1 million, in Royal Dutch Shell B shares.
Although the fund doesn’t discuss divestment in its statement of investment principles, it does say that the trustees encourage engagement by its investment managers with companies on ESG issues “to positively influence company behavior and enhance shareholder value.”