Environmental activist group Extinction Rebellion is targetting UK public pension funds that continue to invest in fossil fuels.
The latest bank holiday weekend in the UK brought a fresh wave of protests across the country including in Somerset, England, where the committee for the County Council Pension Fund was accused of contributing to global warming through its exposure to non-environmentally friendly energy providers.
Extinction Rebellion protesters with banners and signs gathered outside Somerset County Council’s offices in Taunton last weekend to demand the pension fund — which manages assets for employees of the public services, the county council, schools, colleges, and charities in the area — change its investment strategy to exclude assets related to fossil fuels.
Banners reading ‘fossil fuel is killing the planet’ and ‘no pensioners on a dead planet’ were planted outside the offices in what was the second attempt this year to pressure the fund’s overseers into changing their stance.
The protests are the latest example of beneficial owners being driven into adopting increasingly stringent environmental, social and governance (ESG) policies.
For asset owners with active lending programmes, their ESG policy will not only dictate what types of assets they will have available to lend but also what stocks can be accepted as collateral for loans.
According to Somerset County Council Pension Fund’s 2018/19 report, which offers the latest publicly available data, the fund had £43.28 million worth of assets on loan via its custodian, J.P. Morgan, as of 31 March 2019.
It also held £47.62 million in collateral against these loans. The collateral made up of a roughly 50/50 split between government bonds (EU, UK, and US), and equities.
In total, the fund has £2.31 billion in assets under management as of 30 June this year.
A spokesperson for the council tells SLT that the Somerset County Council Pension Fund Committee had already committed to a review of its investment strategy back in March, which includes a full review of ESG issues, including climate change.
The review is due to be completed by 2021.
The committee says it hasn’t undertaken a full review of its approach to climate change since last year’s declaration yet because the fund has been involved in a complex transfer process involving partner South West funds, which will see 10 funds in the region managed by Brunel Pension Partnership, the spokesperson adds.
This transfer should be complete by the end of the year.
Brunel Pension Partnership has published its ESG policy and specifically a Climate Change Policy, which ultimately would apply to all of the pension funds it manages.
“The committee is semi-independent from the Somerset County council and its main responsibility is to the membership, not employers,” the spokesperson adds.
“This means it’s not bound by the policies of the council, but the declaration of a Climate Emergency by the Council and similar declarations or recognition by other partner Councils in Somerset will inevitably be an influencing factor.”
Speaking to SLT last month, Lothian Pension Fund’s ESG guru David Hickey explained that most of the pressure the Scottish fund receives to change its policies come from lobbying groups rather than directly from members.
“There are pressure groups for lots of areas and there’s a risk that you can say “yes” to everything and risk being left with literally nothing to invest it. We’ve taken the stance that there are certain areas that are now commonly understood as being not acceptable and we’ve created our ESG policy along those lines,” he says.
Extinction Rebellion was unable to confirm if it was aware of the on-going ESG review prior to its protest. It also declined to comment on the possibility of further protests against pension funds.
Image: XR Taunton/YouTube 