UK pension funds invest £128bn in fossil fuels, report reveals
New report from Friends of the Earth reveals none of the major UK pension schemes have plans to divest from fossil fuels
UK pension funds have invested an estimated £128bn in fossil fuels, according to a new report published today by environmental campaign group Friends of the Earth.
Polluted Pensions? Clearing the air around UK pensions and fossil fuels examines the investments of six leading pension funds in the UK and finds investment in fossil fuels typically account for over four per cent of their portfolios. If the share is extrapolated to cover the entire pension sector then an estimated £128bn would be invested in fossil fuels, the equivalent of nearly £2,000 per every UK citizen.
The report also revealed that none of the UK’s largest pension funds had made plans to fully divest from fossil fuels, despite a warning from the International Energy Agency in May that there can be no new investments in fossil fuel exploration if the Paris Agreement is to be met.
The authors of the report call on pensions funds and schemes to develop fossil fuel divestment policies, employ fund managers that recognise the need for divestment, and increase the transparency of their investments.
A growing number of pension funds in the UK have set net zero targets for their portfolios and maintain that they are working to rapidly curb the carbon footprint of their investors. However, many fund managers maintain it is more effective to engage with carbon intensive companies to encourage them to develop decarbonisation strategies, rather than simply sell their stakes to different owners.
Friends of the Earth maintains that divestment can play a valuable role in curbing overall emissions and starving carbon intensive firms of investment. As such the report does commend some UK based funds that have divestment plans, including the London Borough of Islington Pension Fund, which has committed to divest from all fossil fuels by 2022 and invest in green projects instead.
“With mere days until the UK hosts the UN Climate Change Conference and at a time when public concern about climate change is consistently growing, this report shows that pension funds are desperately lagging behind on climate action,” said Rianna Gargiulo, campaign and community organiser at Friends of the Earth. “Beyond that, pension funds are also playing fast and loose with workers’ hard-earned contributions by continuing to invest them in an industry in decline.
“Anyone shocked to hear that their pension may be heavily invested in fossil fuel polluters should write to their pension fund, ask about its investments in the industry and call on it to divest.”
Further findings from the report reveal that only seven of 27 of the UK’s largest pension funds and schemes published detailed information about their investments, while half published no information about their investments.
In related news, the government-backed pension fund Nest announced on Tuesday that it had purchased a solar farm with 60,000 panels in an old landfill site in Reading, and promised each of its 10 million members would have money invested in the project.
