Updated Council Motion: Pension Fund Divestment from Fossil Fuels

With COP26 coming to an end recently, now is a really good time to pass a Pension Fund Divestment motion through your Council.

Research by Divest UK has shown that most Council’s still invest heavily in Fossil Fuels through their pension fund. They have produced an interactive table showing the Fossil Fuel investments made by all Local Authorities here. We have produced an updated Council Motion that allows you to use this local information for your own Council.

A further briefing on Pension Fund Divestment from Divest UK can be found here.

Template Council Motion

Council recognises that burning fossil fuels contributes significantly to global warming. Research demonstrates that 80% or more of the world’s fossil fuel reserves will have to remain unburnt if we are to meet targets for climate change mitigation. As four-fifths of known fossil fuels must remain in the ground; investing in them now presents a substantial financial, as well as environmental, risk.

[Council Name] currently has [£***] million invested in fossil fuel through its Local Government Pension Fund Scheme – [INSERT PENSION FUND NAME]

Council believes that this investment is both environmentally and financially irresponsible. Every indication points to renewable energies and green technologies being much safer investments for pension funds going forwards. With COP 26 taking place in Glasgow in November 2021 the world’s eyes will be on the UK to show leadership on climate change. Divesting from fossil fuels in our pension fund is a clear and meaningful action we can take here in [AREA NAME]. Council recognises that fossil fuel investments should be considered part of the council’s ‘carbon footprint’ and divesting our pension fund is one of the most impactful steps we can take to reduce our impact on our community and the world.

Council therefore commits to:

  • Reviewing its Investment Strategy and developing and implementing a Responsible Investment Policy which rules out new investments in fossil fuel companies. 
  • Calling on [Insert Council]’s Pension Fund to divest from fossil fuels by requesting its representative(s) on the Pension Fund Committee to call for the development and adoption of responsible investment policies which:
    • a. Immediately freeze any new investment in the top 200 publicly-traded fossil fuel companies.
    • b. Divest from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds within [insert agreed number of years given market forecasts].
    • c. Set out an approach to quantify and address climate change risks affecting all other investments.
    • d. Actively seek to invest in companies that will reduce greenhouse gas emissions and minimise climate risk. 
  • Council further instructs the chief executive to write to the Leaders and Chief Executives of all other councils that use the [INSERT PENSION FUND NAME] outlining this Council’s position and asking for their support to adopt the same policies. 

Bob Johnston says

As I have posted elsewhere in my view impossible to implement, because of the all pervasive nature of fossil fuels in the economy and the necessity of a fiduciary duty to the pensioners. Much is possible and here in Oxfordshire we have just put £535 million pounds into a low carbon passive Brunel fund which is Paris 1.5 degree C aligned. I chair the Oxfordshire Pension Fund Committee

George Potter says

I have to disagree with Bob Johnston. I'm on the Surrey Pension Fund Committee and there are many other funds which have already committed to partially or fully divesting from fossil fuels.

There are a great many investment options available, with more constantly coming to the market, which exclude fossil fuels from the investment portfolios.

Paris-aligned investment options are widely available, and there are a great many benchmarks to help funds judge whether an investment offering is Paris aligned. The EU benchmark for Paris aligned funds includes rules like no investments in companies with any revenue from thermal coal or tar sands, more than 10% of revenue from oil, or more than 50% of revenue from natural gas.

With all these options out there this motion is definitely possible for pension funds to implement.

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