Divestment Day: Pension funds, financial institutions and councils urged to stop investing in climate crisis
UK Divest coalition leads latest round of action ramping up pressure on investors to stop backing fossil fuel projects
Fossil fuel divestment groups across the UK are today issuing fresh calls for local authorities, pension funds, and financial institutions to take action to address the fuel poverty, energy, and climate crises by halting investment in fossil fuels.
The calls are being delivered by more than 30 groups across the country who set to join today’s Divest from Crisis day of action which has been organised by UK Divest – a collaboration between Friends of the Earth and Platform.
The calls on councils, pension funds, and financial institutions to divest their holdings in fossil fuel assets comes in the same week that the IPCC warned that there is “a rapidly closing window of opportunity” for countries to act on climate change to secure a “liveable and sustainable future” for all.
“Investors like our local council pension funds have a clear choice,” said Rianna Gargiulo, divestment campaigner at Friends of the Earth. “They can either continue gambling billions on fossil fuels and propping up a broken and costly energy system or invest in what’s really needed right now: decent housing and affordable renewable energy for all.
“This crisis will only intensify if we don’t divest from fossil fuels and invest now to drive the transition for a clean, fair and affordable future.”
UK Divest said it has now secured backing from more than 50 local councils, with the most recent support coming from Cheltenham Borough Council earlier this week.
According to previous research by UK Divest in 2021 the UK pensions industry was estimated to have invested as much as £128bn in fossil fuel companies. The group also criticised UK banks, which it claimed have invested tens of billions into fossil fuel expansion projects that risk tipping global heating beyond the levels agreed under the Paris Agreement.
As households across the UK continue to struggle to pay their soaring energy bills, UK Divest said it is calling on investors to divest from expensive and unstable fossil fuels and boost investment in affordable and future-proof renewables.
Robert Noyes, energy economist at Platform, re-iterated that UK pensions funds should “stop propping up risky fossil fuels and invest in a future worth retiring into”.
He highlighted Shell and BP as examples of companies which use “soaring energy costs to double down on payouts and fossil fuel production”.
“Shell and BP made enough profits in 2022 to pay 80 per cent of the UK’s household energy bills in full,” he said. “Instead, they boosted executive pay and backtracked out of paltry climate commitments. Whether it’s the climate disaster or the cost of living – they profit, we pay.”
Fossil fuel companies have been widely criticised for making large payouts to shareholders in the middle of the cost-of-living crisis. Divest UK cited a recent report by think tank Common Wealth which found that BP distributed £11.8bn in shareholder payouts in 2022, which is estimated to be fourteen times the firm’s capital expenditure in low-carbon energy projects.
“The fossil fuel industry relies on a familiar defence: their profits pay our pensions,” said Matthew Lawrence, founder and director of Common Wealth. “But this just isn’t true on any meaningful scale. UK pensions don’t own enough of BP or Shell for their profits to make a difference to most people.
“UK pensions are propping up the industry by not completing the job of fully divesting from it. We have the capacity to decarbonise justly and rapidly and provide security for all in old age. But first we have to wind down Big Oil and put our pensions into a just transition.”
The ‘Divest from Crisis’ campaign day is expected to take place across the UK today, with marches and events taking place in London, Gwynedd, North Wales, including Nottinghamshire, Tyne and Wear, Glasgow, Greater Manchester, Leicestershire, Warwickshire, East Yorkshire, and in West Yorkshire and Edinburgh.
Today’s events take place alongside renewed public demands for fossil free investment both in the UK and globally. These include Operation Noah’s ongoing “40 Days, 40 Dioceses” campaign, calling on church dioceses to divest from fossil fuels by the end of Lent, and Third Act’s “Stop Dirty Banks” mobilisations across the US earlier this week.
Growing numbers of funds have divested from fossil fuels, but the bulk of the investment community maintains that it can help deliver net zero emissions by engaging with carbon intensive firms and encouraging them to develop credible decarbonisation strategies. They maintain that full spectrum divestment from fossil fuel assets could precipitate and energy supply crisis if production is wound down before sufficient clean energy sources have come online.
But divestment campaigners counter that continued investment in fossil fuel assets risks funds being left with stranded assets that will see their value rapidly diminish as the transition towards clean technologies gathers pace and demand for fossil fuels starts to fall.
This week also saw the publication of new guidance from the Institutional Investor Group on Climate Change, which set out how investors can develop strategies that enable the transition to net zero infrastructure investment portfolios.
