A new report has revealed that the City of Edinburgh Council’s own pension fund has £164,691,111 invested in climate-polluting fossil fuel companies. The revelations come despite the council declaring a climate emergency in 2019 and committing to become a net-zero carbon city by 2030.
The report found that overall in Scotland, £1.2 billion was invested in fossil fuel companies by council pension funds. None of the 20 Scottish councils that have declared a climate emergency have taken action to end their investments in the coal, oil and gas firms chiefly responsible for driving this crisis.
The report by Friends of the Earth Scotland, Platform and Friends of the Earth England, Wales and Northern Ireland was compiled from Freedom of Information requests.
Lothian Pension Fund is the second largest local government pension scheme in Scotland and administers the pensions of 84,000 members. (4) Lothian is operated by the City of Edinburgh Council on behalf of East Lothian, West Lothian and Midlothian.
Lothian Pension Fund invests £771,000 in Exxon and £1.47 million in Royal Dutch Shell. The companies are co-owners of the Mossmorran plants in Fife, which is Scotland’s third largest climate polluter. The Scottish Government is currently considering launching a public inquiry after 5,000 complaints were submitted about the flaring, air and noise pollution from the site.
The pension fund also invests £9.1 million in the Italian oil company, Eni. Both Eni and Exxon are involved in the construction of a major gas export development in Mozambique which is associated with increased militarisation and violence in the region, and led to the displacement of local communities.
Strathclyde Pension Fund was the worst offender in Scotland after being found to have £508 million invested in companies such as Shell, BP and Exxon. This is despite Glasgow hosting the UN climate conference later this year and Councillors declaring a climate emergency in May 2019.
As fossil fuel company stocks have fallen in value in recent years, local councils have lost out. £194 million of value was wiped off the oil and gas investments of the Scottish council pensions between 2017-20 with the Strathclyde Pension Fund alone losing £46 million and Lothian Pension Fund losing £36 million.
Across the UK, total fossil fuel investments in the pension funds stood at £9.9 billion – an average of £1,450 per scheme member.
Over half of Scotland’s universities have committed to divest from fossil fuel companies, including Edinburgh, Stirling and Dundee Universities, alongside local government funds in Southwark, Islington, Lambeth, Waltham Forest, and Cardiff.
Alan Munro from local campaign group Divest Lothian said: “We all deserve a future worth retiring for, but continued investment in fossil fuels by our politicians and local councils threaten that future, both here in the Lothians and around the world.
“We’ve been campaigning for some time for the Lothian Pension Fund to make a strong commitment to climate action and divest from the fossil fuel companies. Public institutions have a moral duty to put the long-term well-being of their communities first.
“This recent report shows that, up to present, the Lothian Pension Fund has not heeded our calls for divestment. As Scotland prepares to host the UN COP26 Climate conference in November, the fund has an opportunity to show climate leadership and invest more in renewable energy and other sustainable and ethical sectors so that we can create a better future.”
Ric Lander, Divestment Campaigner at Friends of the Earth Scotland, commented: “Many local authorities have declared a climate emergency and have plans in place to bring down emissions from transport, buildings and waste.
“Pension fund investments are currently working against this progress by continuing to back the ageing fossil fuel economy. Local councillors have the opportunity to show leadership on climate action by telling fund managers to divest from fossil fuels.
“Scottish council pensions are directly invested in the continued search for new fossil fuels through their ownership of companies like Shell and BP. This drive is undermining efforts to curb the climate emergency here in Scotland and doing untold damage to vulnerable communities around the world.”
Stephen Smellie is Deputy Convenor of UNISON Scotland, who are the largest union representing local government pension fund members. He reacted: “It is disappointing that the people who manage the pension funds of local government workers are oblivious to the climate crisis that is facing us.
“Workers care deeply about a sustainable future for their children, and if pension funds consulted with the people whose money they are investing they would know that. Instead, they continue to be part of the climate crisis problem rather than being part of the solution that they could be if they increased investments in sustainable alternatives.
“The value of the fossil fuel investments is high but only a small percentage of the funds’ overall investments so there is no financial justification for maintaining investments in coal, fracking or further fossil fuel exploitation.”
“There is a moral and ethical case for divesting from polluting fossil fuels. But there is also a firm financial case to remove workers’ pension funds from investments that will lose value as the world moves to a low-carbon economy which is less dependent on fossil fuels.”
