CAMPAIGNERS have claimed that Scotland’s largest local authority pension fund has backtracked on a pledge to do away with investment in fossil fuels.
Strathclyde Pension Fund, has an estimated combined £836 million tied up in direct and indirect investment in fossil fuels, according to analysis by Friends of the Earth Scotland.
According to the study, the Strathclyde Pension Fund has boosted its ties with fossil fuels from £618 million in 2020 to £836 million in 2021.
But direct investments in fossil fuels have declined from an estimated £173 million in 2020 to £138 million in 2021.
The investment includes £29 million in Italian-based oil giant Eni, £9.2 million in Norwegian energy company Equinor and £8.6 million invested in BP.
Activists are claiming that in June last year, the Strathclyde Pension Fund Committee made a commitment to divest from companies which do not meet minimum climate standards.
In April last year, Glasgow City Council voted in favour of divesting from fossil fuel companies.
But campaigners have pointed to papers published ahead of a meeting of the pension fund committee tomorrow, suggesting that the pledge has been weakened – leading to a continuation of investment in fossil fuels companies.
The Strathclyde Pension Fund has insisted there has never been “any commitment to indiscriminate divestment” from fossil fuels.
On Monday, the Secretary-General of the United Nations, Antonio Guterres, warned that fossil fuels “are choking humanity".
READ MORE: IPCC Report: Oil and gas giants 'on notice' after dire UN climate analysis
The intervention came after the IPCC published a stark report issued a “dire warning” over the grave and mounting threat global warming poses to physical and mental health, cities and coastal communities, food and water supplies, and wildlife across the world.
The Strathclyde Pension Fund Committee will be asked to ”adopt and implement the energy company standards framework”.
A rating system, set to be approved, includes clear net zero targets and decarbonisation plans being set.
The traffic light framework “aims to identify where there is a need to engage with a company on specific areas or consider divesting from a company”.
If an investment is found to be ‘green’, it will continue to be monitored annually.
If any companies are marked amber in any area, they will be “flagged for active engagement actions”. If the company is rated amber overall and red in one area, “active stewardship actions” will be triggered, and management of the company would be required to present a business case, addressing low scoring areas.
The plans state that if no improvements are made after two years, the committee could “mandate that investment managers removed that security from portfolios”.
Despite oil giants being part of the portfolio, initial analysis found that no investments are expected to be graded as red.
Stephen Smellie, depute convener for Unison Scotland, said: “It is very disappointing that, since the COP26 spotlight on Glasgow has moved on, the people who run our pension fund feel able to backslide on the commitments to take seriously the need to divest from investments in fossil fuel.
“Having raised expectations that Strathclyde Pension Fund will be part of the solution to the problem of climate change, it appears that it will remain part of the problem. They don’t even think it appropriate to consult with the people who pay into the fund, the pension fund members.
“Councillors really need to step up and insist on the pension fund living up to the expectations of the fund members, including many thousands of Unison members.”
Geraldine Clayton, member of the Strathclyde Pension Fund and campaigner with Divest Strathclyde, said: “After a whole year of obfustication since Glasgow City Council voted in favour of fossil fuel divestment, we need the Strathclyde Pension Fund committee to finally make that promise a reality.
“The IPCC report came out yesterday, and - though written in measured terms - it is a brutal read with the overriding message that the window of opportunity we have to stave off disaster is fast closing, and there must be no more excuses for inaction.”
READ MORE: Michael Gove claims SNP may wish to divert future oil and gas funding
She added: “The last seven years were the hottest on record. We desperately need to stop fuelling the injustice of climate disaster and instead help to fund the solutions and create jobs in the green economy.
“Glasgow City Council has recognised that we are in a ‘climate emergency’. As a pension fund member, l would like to ask the committee how many more warnings we need. The councillors on that committee need to act with the decisiveness an emergency requires.”
A spokesman for Strathclyde Pension Fund said: “The paper absolutely reflects the policy agreed by committee and there never has been any commitment to indiscriminate divestment. The campaign is, however, well aware of both of those facts.
“Strathclyde Pension Fund is one of the first large investors in the world to commit to developing a set of minimum standards for firms as part of its climate strategy – and to have agreed to include divestment as a tool where these standards are not met.
“The papers going to committee are an update on the work ongoing to establish and implement those standards – including investment analysis, metrics and processes, which have been developed by the fund and its advisers.
“In the meantime, the fund’s investments in fossil fuels have been steadily reducing for a decade and are dwarfed by its interests in renewable energy.”
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