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CLIMATE EMERGENCY: Call on pension fund to divest from fossil fuels

CLIMATE EMERGENCY: Call on pension fund to divest from fossil fuels

Image: LDRS

Campaigners have called on a multi billion pound pension fund to withdraw its investments from coal, oil and gas companies amid claims that time is running out due to the climate emergency.

A demonstration was held in Caernarfon by members of Divest Gwynedd, which says that over £50m is currently invested in fossil fuels while urging “decisive action and a published timetable for divestment.”

The Gwynedd Pension Fund manages a pot worth over £2bn for Gwynedd, Ynys Môn and Conwy council employees, North Wales Police, Cartrefi Conwy, Cartrefi Cymunedol Gwynedd, Snowdonia National Park Authority and 36 other employers across the north west of Wales.

Controlling money put away by public sector workers for their retirement, the fund supports low carbon initiatives through its direct investment portfolio but also retains large holdings in fossil fuel industries.

After Gwynedd Council declared a climate emergency in 2019, a decision was made to transfer 12% of the pension fund into low-carbon investments via the BlackRock World Low Carbon equity fund.

This particular fund seeks to invest in green infrastructure projects, such as renewable energy, alternative fuels and clean technology, looking to optimise returns as well as “delivering positive environmental outcomes”.

But according to campaigners, while there has been a reduction over recent years, more action is needed.

Draped in black costumes, signifying the role of oil and gas in global deaths due to climate change and a clock representing time running out, Monday saw the group deliver a letter claiming that fund managers are not acting quickly enough.

A spokesperson said:  “Unfortunately, acting fast is precisely what they are not doing.

“They are risking people’s pensions by potentially creating stranded assets. They could be looking at opportunities to invest in renewable energy projects in Wales.

“Current scientific assessments suggest that if we are to stand a chance of staying below two degrees of global warming, we must stop burning fossil fuels as soon as possible and certainly not explore for more.

“The catastrophic future consequences of continuing to use these fuels will lead to an increasing number of extreme weather events directly attributable to climate change, such as the recent record breaking heatwave in Canada which resulted in hundreds of deaths.”

Another member added: “There are clear environmental and social non-financial reasons to divest.

“Many other local authority and other pension funds have committed to divestment. All have a fiduciary duty to their members, so why can’t Gwynedd?”

According to the fund, “significant steps” have already been taken with Russell Investments – the Wales Pension Partnership’s management solutions provider –  and other partners declaring that they want to achieve a standard of net-zero carbon emissions in their investment portfolios globally by 2050.

Other highlighted measures include:

  • WPP Global Growth Fund (17% of Gwynedd fund) includes Baillie Gifford’s Paris aligned fund which disinvests from fossil fuel extractors and fossil fuel service providers, and Pzena who sold their holding in a company which contributed to 35% of carbon emissions of this particular fund.
  • WPP Global Opportunities Fund (17% of Gwynedd fund) has implemented a ‘decarbonisation overlay’ by Russell Investments which reduces the carbon footprint by 25%.
  • ESG GRESB Benchmark – Fund has a 10% allocation to property investments and property managers, USB and Black Rock have kept their first and second position in their peer group for their environmental, social and governmental factors.
  • Manager engagement – Fund engages with managers, e.g. on their voting records, to influence change at the companies the fund invests in.

A spokesman on behalf of the Gwynedd Pension Fund said: “The Gwynedd Pension Fund plan appropriately, take real action, and influence in many ways for the benefit of our environment.

“Decisions to invest or not in a particular company or type of asset will be based on the ability to generate sustainable long term returns for the fund, and this will be influenced by the approach a company takes to climate change.

“Gwynedd’s Pensions Committee are aware of the potential risks and are seeking to ensure that the Fund is invested in companies which are diversifying their businesses towards renewable sources of energy, so that they are less exposed to oil and gas in future. the Wales Pension Partnership’s Global Opportunities decarbonisation strategy, the Fund already excludes thermal coal producers based on stranded asset risk.”

They added: “As active long-term asset owners Gwynedd Pension Fund believes that engagement is more effective tool divestment, and we regularly challenge our asset managers on their progress on environmental, social and governance issues.

“Divestment from fossil fuels needs to be considered in the round as part of an overall strategy to reduce carbon emissions across all sectors.

“As an individual pension fund and nationally as part of the Wales Pension Partnership (WPP) we have a common goal of investing locally, and nationally in Wales in renewable projects.

“We are considering investing in renewable and community projects across Wales, subject to satisfactory due diligence.”


Words: Gareth Williams, Local Democracy Reporter

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