Row breaks out over pension investments


A REPORT criticising Dumfries and Galloway Council for investing its pension fund in companies most responsible for climate change has been challenged over its accuracy by the authority.

The report, published by Common Weal, UNISON Scotland and Friends of the Earth Scotland (FoES) also says the council has failed to invest in green infrastructure.

It says the investments are held through the council’s pension fund and should be invested for the long-term benefit of pension fund members. Oil, gas and coal companies are financially risky because government action on climate change threatens their long-term viability.

It claims the council invested £70.5m in fossil fuel stocks or 10.2 per cent of its pension fund, the highest proportion in Scotland, and not invested any of its pension fund in renewable energy. It had offered no evidence of having discussed how climate change affected its investment strategy.

The council invests £7.7m in BP, which is drilling for oil in the Arctic and fracking and has a history of campaigning against subsidies for renewable energy. It invests £12.9m in Shell, which is fracking in North America and is accused of being responsible for a series of spills in Nigeria.

Ric Lander, divestment campaigner at FoES and report author, said: “Only three councils have any investments in social housing and renewable energy in Scotland, despite strong returns available and many benefits. Most council pensions are invested in stocks and shares which bring few tangible, local benefits.”

“Divesting from fossil fuels is an opportunity to contribute to a brighter future. With Scotland going to the polls in May, we want to see candidates getting serious about responsible investment.”

Dave Watson, UNISON’s Scottish organiser, added: "Too many of our pension funds are investing in obsolete technologies and risking our members' hard-earned contributions. The future of energy is green and within sight. Our pension funds need to be part of the future, not the past."

A council spokesman said: "As at December 31, 2016, an estimate of 7.3 per cent is in “energy” but this is not necessarily investment in fossil fuels.

"£30.5m can be identified as a specific holding in oil companies but it is not possible to identify individual companies within pooled investments. There's no way of knowing whether they also invest in renewable energy.

"The FoES press release says the pension fund had 10.2 per cent of its £692m assets invested in fossil fuel companies, which equates to some £70.6m. The figure of £692m was the fund value at March 31, 2016 and appears in the annual accounts.

"It is unclear where the figure of 10.2 per cent (£70.6m) in fossil fuels comes from and may simply be an estimate based on the fact that energy equities have made up about 10 to 12 per cent of the FTSE All Share Index.

"They have applied this to the total value of the funds’ assets rather than the amount held in equities.

"Our principal objective is to ensure scheme members and their dependants receive all benefits as and when they become payable. The fund has considered socially responsible investment in the context of its legal and fiduciary duties and obligations."

Councillor Ronnie Nicholson, council leader, said: "Although the figures appear not to be accurate, I welcome this report. Pension fund managers are legally obliged to protect their members' pensions but that can be done in a way which factors in ethical and environmental principles and I would encourage them to do that.

"The public may have a different view on whether a British oil company, which employs thousands of people in the UK, including at petrol stations in Dumfries and Galloway, is a valid investment for a pension fund.

"It is up to the pension fund members and their representatives on the pension sub-committee to decide the relevant policy."

Wednesday, April 5, 2017 at 10:19AM
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