County Hall urged to stop investment in fossil fuels

Hertfordshire Pension Fund to stop investing in polluting fuels.

Hertfordshire Pension Fund to stop investing in polluting fuels. - Credit: Getty Images/Hemera

Should our councils be investing in fossil fuels like oil and gas? That is the question at the heart of a debate between the district and County Hall.

St Albans Green councillor Simon Grover won unanimous backing for a district council motion calling on the county council's Hertfordshire Pension Fund to stop investing in polluting fuels.

The Herts fund, which holds investments to pay for local council workers' pensions, was branded as being in the worst category of local government funds in terms of protection against the financial risks posed by climate change in a 2018 report.

Addressing the district council last week, Cllr Grover said: "There is no sign of action beyond statements about engagement, no talk about the danger of stranded assets, and no sign of a plan to decarbonise the fund.

"This motion urges them to do more."

Cllr Grover pointed out that many other institutions were 'divesting' from fossil fuels, which were financially dangerous when most of the known reserves could never be used if we are to meet climate change targets.

He said later: "The government, the Bank of England, JP Morgan, BlackRock - everyone is warning about the danger of these investments both to the planet and to our pockets. So I'm delighted that the council has unanimously backed the call for Hertfordshire to act on this."

Most Read

The Herts fund currently holds around £90 million directly in oil and gas companies. "Getting rid of fossil fuel investments is an extremely effective way for pension schemes - and anyone with pension savings - to lower their carbon footprint. In fact it's many times more effective than a lifetime of cutting back on meat, water use, cars and planes," said Cllr Grover.

"So, divesting its pension fund from fossil fuels is a big opportunity for our county council to back local efforts to bring down our emissions."

St Albans council will now ask the county to carry out further measures, including adding a statement to its published strategy that climate change constitutes a financial risk to the fund, and developing and implementing a strategy to eliminate the fund's exposure to fossil fuel companies over the next five years.

It will also be urged to focus its shareholder engagement activity on sectors where meaningful progress in reducing climate risk is possible, and set goals for reinvesting in the local low carbon economy.

Cllr Ralph Sangster, executive member for resources, said the fund was looking at more environmentally aware options but without stopping investment in fossil fuels.

"Hertfordshire's pensions committee regularly assesses the performance and appropriateness of the fund's investments. During this financial year (19/20) the fund has undertaken a review of its investment strategy including its environmental, social and governance (ESG) policy.

"During this strategy review fund officers and committee members undertook appropriate due diligence and gathered supporting evidence to inform any changes/enhancements to its investment strategy and ESG policy.

Following this review the pension committee authorised an investment of £100m in a carbon-aware equity index fund. The fund has not made a decision to disinvest from oil and gas but will continue to assess this sector and ask its managers to review those investments in light of evolving evidence.

"The Hertfordshire Fund does not dismiss the investment implications of climate change and as a long term investor charged with looking to the interests of beneficiaries over many decades into the future, the fund recognises climate change as a significant risk factor for its pension fund investments.

"The Hertfordshire Pension Committee also recognises that ESG risk and stewardship are rapidly developing topics and it is committed to ensure that these factors carry due weight in the fund's investment decisions.

"A proposed plan prepared by the fund's investment consultant, for the development of the fund's ESG/Responsible Investment policy is to be discussed and considered at the next meeting of the committee along with a revised investment strategy with a view to their adoption."