‘Green’ Scots public sector pension fund rejects ‘virtue signalling’ fossil fuel divestment

ONE of Scotland’s biggest public sector pension funds has rejected divestment from fossil fuels saying it will not curb carbon emissions.

The Lothian Pension Fund has hit back at calls to move its investments to help curb the climate crisis ahead of the 2021 United Nations Climate Change Conference (COP26) in Glasgow saying it did not want to indulge in “virtue signalling”.

It came after it emerged its investment in fossil fuels rose by 40% in a year.

New data showed that the fund which supports over 100,000 employees is investing in BP, Chevron, Exxon and Shell, as well as in mining giant BHP.

Green campaigners have raised concern that there is “inaction inertia” with no move to divest from fossil fuels.

Climate activists from campaign group Divest Lothian staged a protest outside Edinburgh City Chambers on Monday to demand the pension fund, removes this money from investments which they say is fuelling the climate crisis.

They have raised concern that as The City of Edinburgh Council pledged to become a net-zero carbon city by 2030 and Midlothian, West Lothian and East Lothian Councils declared a ‘climate emergency’ in 2019, the Lothian Pension Fund has “continued to profit” from some of the coal, oil and gas companies which they say are most responsible for the climate crisis.

Shell is one of the owners of the controversial Cambo oil field, situated off the coast of Shetland, which campaigners are currently fighting to stop going ahead.

The Lothian Pension Fund, overseen by the City of Edinburgh Council, is among a record number of signatories to a joint global investor statement calling on governments to urgently ramp up their efforts to address the climate crisis.

HeraldScotland:

The Investor Agenda’s 2021 Global Investor Statement to Governments on the Climate Crisis contains the collective views of 587 major investors from around the world, representing around 40 per cent of global assets under management.

And in June a new “statement of responsible investment principles” from the pension fund says that “climate change is undoubtedly one of the defining issues of our time” and that its commitments going forward include ceasing “primary investment in companies that aren’t aligned with the goals of the Paris agreement”.

Almost 200 countries ratified the Paris climate accord at COP21 six years ago agreeing to pursue efforts to limit the planet’s temperature increase to 1.5C above pre-industrial levels.

But research has found the pension fund’s fossil fuel investments have risen by £64 million since 2020 and now stands at £229m.

The value of its energy holdings is higher than in 2020 as stock prices have risen by more than 65% over the last 12 months.

In June, the International Energy Agency (IEA) said that the world’s demand for oil will rebound to pre-pandemic levels by the end of 2022, as recovering economies require oil-producing countries to pump more fossil fuels.

But the Lothian Pension Fund is resisting calls for divestment from fossil fuel companies – saying it prefers to enact change from the inside.

A spokesman said: “The Fund’s position is… it favours a policy of engagement with companies as opposed to divestment of shares.

“Divestment campaigners think that selling shares changes carbon emissions and that companies disappear. That is simply not the case. Reduced emissions are achieved by changing company strategy, government policy and individual choices. The fund is concentrating on real world decarbonisation outcomes, not virtue signalling.”

The spokesman also pointed out that the fund owns a higher percentage of assets in renewables than it does in traditional fossil fuel energy companies.

“What we know about the transition is that it will be long and complex. Fossil fuels will, in fact, be required in significant quantity to effect the transition that we all want,” the fund said.

Fund chief exectuive David Vallery said: “We support the transition to a carbon free economy and at LPF we are confident we are doing our part. We use our investments and engage with companies seeking positive change and invest in wind, solar and hydro to provide renewable alternatives.”

The Lothian Pension Fund is the second largest local government pension scheme in Scotland and administers the pension funds of over 84,000 members from The City of Edinburgh Council and three other local authorities in the Lothians. It also manages the pensions of 90 employers, including Scottish Water, Edinburgh Napier University, Lothian Buses and Heriot Watt University.

The study carried out by Friends of the Earth Scotland checked the fund for investments against the Carbon Underground 200 – a list of the largest owners of carbon reserves.

Iain Struthers from Divest Lothian said: “It is deeply inconsistent and morally unjustifiable that Edinburgh City Council is positioning itself to be a zero-carbon city by 2030, but with no mention of divesting its interests in fossil fuels.

“Stakeholder engagement will never change the core business model of polluting companies. Divestment is an essential step to accelerate the just transition to a sustainable future for all.”

It comes as activists Extinction Rebellion plan to hold a protest on the streets of Edinburgh this month against a backdrop of the COP 26 climate conference in Glasgow.

The 26th UN climate conference will see world leaders descend on Scotland to discuss the way forward in tackling environmental issues.

But, Extinction Rebellion describe the conference as “systematically corrupted by vested interests” and have vowed to do their level best to disrupt proceedings.

The activist group have sent the City of Edinburgh Council notification of their plans to hold a protest parade through the streets of the capital on October 31.

The City of Edinburgh Council was approached for comment.

The Herald Scotland

The Herald Scotland

The Herald is a Scottish broadsheet newspaper founded in 1783. The Herald is the longest running national newspaper in the world and is the eighth oldest daily paper in the world. The title was simplified from The Glasgow Herald in 1992