There is no way to make this fun, fascinating, or full of interesting facts (well, there will be facts and many acronyms), but it is an important topic. We need to talk about what we can do in the fight against the runaway production of fossil fuels, resulting climate chaos, and the part pension funds can play.
Pension funds invest in fossil fuels
Investing in oil and gas used to be the best way to secure a guaranteed profit. Traditionally, global fossil fuel companies like Shell, BP, Exxon and so on have all been highly subsidised by their respective governments, making them at one time a no-brainer for pension funds, which, according to Greenpeace, hold more than $46tn worth of assets in fossil fuels.
However, over the last 10 years, the movement to limit global warming to below a 2°C rise has led to the concept of ‘stranded assets’, where fossil fuel resources must remain unused. As a result of this, the value of fossil fuel investments has been declining by up to 30% annually.
This is the new reality. If we want to live in, and provide our children with, a world that can support life sustainably, then we must stop burning and investing in fossil fuels.
People want action on climate change. The 89% project, a year-long global multi-national journalism project, has found that “between 80 and 89% of the world’s people want their governments to do more to combat climate change,” but they do not speak out because they think they are in the minority. Perhaps because of this, many pensioners concerned about climate change would support divestment from fossil fuels but likewise do not speak out. But whenever divestment is described in public meetings, people are shocked that council run pension schemes are ‘still’ investing in fossil fuels.
Divest from fossil fuels to invest in the green economy
There is a global divestment movement for pension funds, with much activity focused on local government pension schemes (LGPS), of which there are 86 in England and Wales, with 6.7 million members. Contributors to thee schemes fund investments for their pensions but typically have no say in how the funds are managed.
What to do with funds divested from fossil fuel investments? Invest in the expanding UK green economy. In the 2024 Local Government Association sustainability briefing, green economy is defined as low carbon, resource efficient, and socially inclusive.
In a green economy, growth in employment and income are driven by public and private investment into economic activities, infrastructure and assets. These all allow for reduced carbon emissions and pollution, enhanced energy and resource efficiency, and the prevention of the loss of biodiversity and ecosystem services.
In 2020, the UK’s Low Carbon Renewable Energy Economy was estimated at £41.2bn, employing over 207,000 people full time[SO1] [2] [SO3] . By 2024, the Confederation of British Industry (CBI) reported that nearly a million people were employed full-time in a still-expanding net zero business market where wages trend higher than the national average. Yorkshire and the Humber is one of the major ‘hotspot’ regions of net zero economic activity.
The North Yorkshire pension fund
As a resident of North Yorkshire, the North Yorkshire pension fund (NYPF) is the LGPS on which my attention is focused, along with a few other campaigners, such as Fossil Free North Yorkshire (FFNY). An overview of the NYPF’s investments shows a minimum of £75.9mn in fossil fuels, and there may be other undeclared private investments. This is not a huge amount (on the scale of pension investments) but raises the question: why is it maintained?
The FFNY has pushed for divestment in various ways, including through questions to the pension committee. Their usual response is that ‘engagement’, talking to the likes of Shell and BP, is better than divestment, despite absolutely no evidence that this works. In fact, questions raised at Shell’s annual general meeting in May highlighted the company’s inability to change its ‘business model’.
The £75.9mn (or more) currently invested in fossil fuels could be redirected into the green economy, providing local jobs in sustainable industries as suggested in the Local Government Association sustainability briefing.
A mismatch of strategy and pension investment
North Yorkshire council declared a climate emergency in 2022 and has subsequently published its climate change strategy 2023–2030 where it plans to be ‘net zero’ in its operational carbon use. Unfortunately, this plan does not seem to include its pension scheme. So while the vehicles it and its partners rely on may be electrified, and the goods and services it uses scrutinised for low carbon usage, the NYPF will be free to invest in the exact same fossil fuels that the rest of the council workers strive to reduce.
This strikes me as the height of hypocrisy and a dangerous way to play with all of our futures.
If you are also concerned about climate breakdown, North Yorkshire council and its pension fund’s role in exacerbating it, please contact FFNY at fossilfreenorthyorks@gmail.com.
