New analysis has found that around £2 billion is invested in fossil fuels from local council pension funds in Scotland.
Divesting in fossil fuels is not a new call from environmental campaigners, but activists in Scotland are renewing their pleads with council-run funds to move away from investing in oil and gas companies.
What are pension funds?
There are many different types of pension funds in the UK, but we are talking about workplace pension funds for public sector workers, most notably local council workers.
Essentially, if workers pay into the pension the employer will also contribute along with government support through tax relief.
Read more: Scottish council pensions have more than £2bn invested in fossil fuels
The idea is to pay enough into it that when it matures and you reach retirement age, workers have income to live off when they have stopped earning a salary.
The money that is put into the fund is invested in a range of industries and companies in order to help the pensions mature.
Who manages them for councils?
Even though pension funds are used by local authority staff, they are managed by a board or committee that is independent of the council.
So when councilors or councillors have agreed that pension funds should move away from investing in fossil fuels, it is not quite that simple.
Why are pension funds invested in fossil fuels?
The private equity investments that are made by the local authority pension funds can be made in a range of industries, including historically in energy companies, notably fossil fuel businesses.
From a business perspective, funds are invested where they can make money, with historically, no regard for the ethics of the business, including the climate crisis.
Why are fossil fuels bad for the environment?
Climate science has, for a long time, shown a correlation between burning fossil fuels like coal, oil and gas, and he rise in global temperatures.
In order to cut legal emissions and reach net zero targets, countries around the world need to reduce the amount of fossil fuels being burnt.
Read more: Investigation: Rishi Sunak's 'false' claim North Sea oil and gas cleaner than imports
Why do campaigners want pension funds to divest from fossil fuels?
One method of cutting fossil fuels used by environmental campaigners is to target the funding of oil and gas giants, including pushing for divestment.
The strategy sets out that pension funds should not invest in the fossil fuels industry.
Why haven’t pension funds divested yet?
Due to the complicated set-up of many council pension funds, it is not a straightforward task for them to divest from fossil fuels investments.
Read more: Strathclyde Pension Fund denies it has backtracked on divesting from fossil fuels
For example, Glasgow City Council and Edinburgh City Council have passed motions supporting the divestment of pension funds away from fossil fuels.
But the member councils do not have permission to direct the fund – that is a task of the fund’s own committee and board, with the members bound by fiduciary duty – meaning they cannot prioritise their interests or that of the council over that of the fun.
Many councils have net zero targets and therefore will gradually wind down their portfolio of fossil fuels investments over time, but when their priority is to protect the assets of pension holders, it will take time to completely divest.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel