Greater Manchester councils are continuing to invest in fossil fuels through their staff pension funds despite having declared a climate emergency, new analysis has shown.
Local government pensions across the country hold investments of nearly £10 billion in fossil fuels, according to an assessment by the UK Divest network, which includes campaign groups Platform and Friends of the Earth.
With more than £1 billion invested directly in oil, gas and coal stocks in the financial year 2019-20, the Greater Manchester Pension Fund (GMPF) is the biggest investor in fossil fuels of any Local Authority Pension Fund in the country, and accounts for 68% of all fossil fuel investments by Local Authority Pension Funds in the North West.
The graphic above displaying the ten largest funders identified in the study shows that GMPF is by far the biggest funder of fossil fuels of the 98 pension funds investigated, with a combined oil, gas and coal investment of £1.011 billion.
The report shows the GMPF’s total investment value stood at £22 billion in 2019, meaning fossil fuel business investments accounted for almost 5% of the total value of the Fund in 2019-20, the sixth highest percentage invested in fossil fuels of all local government pension schemes.
When asked to disclose any direct assets as part of the study the report’s authors say GMPF failed to do so, the authors instead had to estimate the Fund’s exposure to fossil fuels based on its 2019 annual report. Because the research found that 72% of local authority pension funds’ investments in fossil fuels were held indirectly through investment funds, the estimated value of over £1 billion of fossil fuel businesses in the GMPF’s portfolio is “very likely to be an underestimate” the report states.
Ten companies account for 70% of local authority pension funds’ direct fossil fuel investments, with three companies alone – BP, Shell, and BHP – accounting for about 40%, the report says.
Mark Burton of Fossil Free Greater Manchester said: “Why risk investing in fossil fuels that threaten everyone’s future when there are clean alternatives that can benefit us all?”
The Greater Manchester Combined Authority declared a climate emergency in 2019. The Fund pledged in 2017 to become 100% net carbon neutral by 2050 in line with the Paris Agreement. The GMPF in 2019 stated it is the biggest local government pension investor in renewable and efficient energy technology, with £500m allocated in a number of areas including biomass assets and the Clyde wind farm. But campaigners say the findings show councils must take more decisive action to divest entirely. Rianna Gargiulo, divestment campaigner at Friends of the Earth, said:
“Declaring a climate emergency may garner good headlines but too often it seems to stop there. Councils can’t make a bold claim about saving the planet while continuing to invest in fossil fuels. Local authorities have the power and duty to ensure local workers not only have a pension for their retirement, but also a future worth retiring into.”
Extinction Rebellion (XR) last week launched a campaign to get Greater Manchester Mayor Andy Burnham to support ending fossil fuel investments by the GMPF. They hope the action will spur Burnham to see the contradiction in being a proponent of a “green city region” while having what XR describe as a “pariah” managing local government pensions and holding so much capital in the conurbation.
The report by Platform and Friends of the Earth says that investing in fossil fuels is increasingly risky, with UK public pensions losing £2 billion on oil investments in the last four years. Last year The Meteor reported £375m had been wiped off the value of the GMPF alone because of its oil and gas investments, equivalent to a £1,000 loss per pension member. Meanwhile, renewables stock prices are growing by up to 20% a year, the report says.
Institutions have therefore been reducing their exposure to high carbon investments. The report highlights six local government pension funds, half of all UK universities, and over 1,250 institutions representing over $14.5 trillion in assets have already gone fossil free.
Investing in fossil fuels also increasingly carries the risk of public backlash against the practice, with the public more concerned about climate breakdown than ever before.
There is now mounting pressure from other Greater Manchester councils being placed on Tameside council, who administer the GMPF, to divest from fossil fuels. Manchester city council’s environment scrutiny committee heard at a meeting on 10 February the council had submitted letters to the GMPF in July and September 2020 urging them to set out actions to divest. As of the time of the meeting there had been no formal response, and as a result councillor Angeliki Stogia, the council’s environment lead, wrote to her counterparts in the other Greater Manchester councils to request a meeting about exerting further pressure on the Fund to divest.
With the UN COP26 talks taking place in Glasgow in November 2021, and the world’s sights fixed on the UK, councils are under pressure to show a real commitment to climate action by ending investments in the companies causing climate damage.
Tameside council have been contacted for comment regarding the GMPF’s fossil fuel investments.
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