Pension company is set to divest in firms which fail the climate test, but is this enough?

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SCOTLAND’S largest local government pension fund will drop investments in fossil fuel firms that fail to act on the climate emergency.

The £24 billion Strathclyde Pension Fund, will become one of the first major funds in the world to adopt a policy of divestment where companies do not meet environmental standards.

The fund will carry out an assessment of energy companies and set minimum standards, in consultation with its investment managers, Sustainalytics.

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Photo by NASA on Unsplash. Strathclyde Pension Fund is based in Glasgow, which will host the United Nations climate change conference COP 26 later this year.

Chair, Councillor Richard Bell said: “When it comes to securing a just transition to a low carbon economy, Strathclyde has always been happy to put its money where its mouth is.

“The fund has long been a leader in terms of measuring and disclosing the carbon impact of its investments; using its clout as a shareholder to push for better environmental outcomes, and backing renewable energy.

“All of that will continue – and that is where we can perhaps have the greatest direct impact on the climate emergency

“However, it’s important that we continue to be bold and to lead from the front – and that is why we have agreed divestment will play a part in our strategy in future.

“We’re putting fossil fuel companies on notice that, if they don’t take their responsibilities on carbon or climate seriously, then we are prepared to drop them from our portfolio.”

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Photo by NASA on Unsplash.It will try to collaborate with other funds that are to introduce divestment policies; including the New York State Pension Fund.

Councillor Bell said: “Our direct investments in clean, renewable energy already dwarf our interests in industries like oil and gas.

“We also understand that some of those traditional energy firms are now at the forefront of investing in a low carbon future – but responsible, forward-thinking companies will welcome Strathclyde setting a high bar.

“Ultimately, this is about saying that we won’t stand for companies putting our investment – and the retirement savings of hundreds of thousands of our members – at unnecessary risk.”

It already has an international reputation as a leader in responsible investment, with a climate strategy that reflects the Paris agreement

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Photo by Kouji Tsuru on Unsplash. But is this all too little, too late for Strathclyde Pension Fund?

The Strathclyde Pension Fund has been criticised for not doing enough by UNISON they say: “Climate justice delayed is climate justice denied.”

UNISON is disappointed that the Strathclyde Pension Fund Committee has deferred a decision about their major investments in fossil fuels.  

Instead, the committee agreed to an assessment of energy sector companies to see if they meet a set of undefined minimum standards.  

Strathclyde is the largest Local Government Pension Fund in Scotland, with over £27 billion on behalf of 250,000 fund members in Glasgow and the West of Scotland. 

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Photo by Johannes Plenio on Unsplash. Around £500 million of this money is invested in fossil fuel companies.

UNISON regional organiser Simon Watson said: “We are facing a climate emergency and we all have to take responsibility. 

“Investing in fossil fuels is ethically unsustainable and a financial risk to workers futures. 

“Strathclyde is the biggest pension fund in Scotland, and those who pay into their pensions expect the custodians of the fund to take this into account.  

“Councillors enter politics to represent the hopes of local people and to make a difference.

“Today they fell short of the mark. 

“With the COP26 UN climate summit coming to Glasgow this year, it would be an embarrassing failure of leadership if Strathclyde Pension Fund does not take decisive action to rid itself of fossil fuel investments.”