21 December 2017
Green Party campaigners in Norfolk have hailed “an important step forward in the fight against climate change” following the government’s decision to make it easier for workplace pension schemes to pull their money out of the fossil fuel industry.
In November 2015, Norwich City Council passed a Green Party motion calling on the Norfolk Pension Fund to divest from fossil fuel companies and consider an ethical investment policy. (1) The issue has since been raised at meetings of the pensions committee, but so far no commitments have been made.
But now, new investment regulations being consulted on by the Department for Work and Pensions will clarify that pension schemes can choose to “mirror members’ ethical concerns” and “address environmental problems”. (2)
A growing number of pension schemes have been divesting from fossil fuel companies in the last two years. Although existing regulations allow social and environmental factors to be considered, a Law Commission review earlier this year found the rules were unclear, and were often wrongly interpreted as requiring schemes to focus only on maximising financial returns.
Despite warnings from industry experts about the impact of climate change on pension funds, more than 80% of Local Government Pension Schemes make no reference to climate risk in their investment strategies. (3) However, two local government pension schemes, Waltham Forest and Southwark, have already pledged to divest from fossil fuels (4), and now activists hope it will be easier for many more to follow suit.
Norwich Green Party councillor David Raby, who has met with pension fund representatives to discuss divestment, said: “More and more pension funds are realising that putting money into fossil fuels is no longer justifiable either financially or morally.
“Pension funds are major investors with a lot of power. These reforms will make it easier for them to act in the long-term best interests of their members and of wider society.
“This could be an important step forward in the fight against climate change. If you are saving for a pension and you care about where your money goes, I would urge you to respond to the consultation and support the changes.”
1. Full text of motion:
The risk to both the planet and Norwich from climate change as a result of burning fossil fuels is very real. Ending Norwich City Council’s financial links to the fossil fuel industry would help it realise the goals outlined in its own ‘environmental strategy’.
Norwich City Council contributes to the Norfolk Pension Fund which has £65,575,000.00 directly invested in fossil fuel-based companies. The council therefore contributes to supporting the fossil fuel industry.
Most fossil fuel companies have shown considerable decreases in share price, eg BHP. Billiton has fallen by over 35% in the last year.
Council, therefore, RESOLVES to:-
1) ask cabinet to:-
(a) consider how best an ethical investment policy, which would include not investing in fossil fuel based companies, might be achieved and make appropriate recommendations to council for inclusion in the treasury management strategy;
(b) engage with local businesses, community groups and other relevant organisations, including Fossil Free Norfolk and Transition Norwich, to explore the potential for supporting a more widespread move to a fossil fuel free future;
(c) call on the Norfolk Pension Fund to consider an ethical investment policy and a rapid divestment from fossil fuel based companies;
2) write to relevant ministers urging them to:-
(a) reverse policies that harm the fight against climate change (such as recent changes to feed-In Tariffs and other subsidies for green energy, changes to planning policy and cuts to green deal finance);
(b) support the principals of fossil fuel divestment and stop subsidies to the fossil fuel industry, and advocate for all countries to commit to this during the COP21 global climate change negotiations later this year in Paris.