Image above: Hounslow’s chapter of Friends of the Earth outside Hounslow House (Left to right – Mariette Labelle, Karolina Adamkiewicz & Maggie Thorburn)
Hounslow’s newly formed chapter of Friends of the Earth have petitioned LB Hounslow to scrap their policy of investing in shares owned by fossil fuel companies, nuclear weapons investors, and the arms manufacturing sector.
The environmentalist group presented the petition to Hounslow’s Pension Fund Panel on Wednesday (30 March). The petition requested LB Hounslow remove Shell, BP and all fossil fuel assets from their investment portfolio as soon as possible, replacing them with an ‘ethical pension fund’.
LB Hounslow invest in a ‘diverse range’ of shares to ensure sufficient funds are available to pay staff pensions. A small proportion of these are fossil fuel companies, fewer than 5% – but this represents some £40m of pension fund members money. Fossil fuel companies tend to have the best investment returns. Divestment, Friends of the Earth says, sends a bigger message to fossil fuel companies to change than continuing to invest in them.
In 2020, the pension panel agreed to incorporate a statement on climate change into its Investment Strategy Statement. As part of this, the Panel decided to switch to low carbon passive fund with asset management company BlackRock. Friends of the Earth criticised the decision, highlighting that the company still provides indirect investments in fossil fuels and arms companies.
The council’s position has been that it prefers to engage with these companies, in order to drive them to change and to transition their businesses to renewables. But Friends of the Earth say many years of engagement have led to very little action or any proof that it actually works. In 2019, 96% of BP’s annual spend was on oil and gas. Between 2010 and 2018, Shell dedicated just 1% of its long-term investments to sources of low-carbon energy like wind and solar.
Other London councils have committed to fully divest from fossil fuels: Islington, Lambeth, Southwark and Waltham Forest.
Image above: left to right – Mariette Labelle, Karolina Adamkiewicz & Maggie Thorburn inside Hounslow House
Investing in fossil fuel companies in 2022 “not acceptable”
Presenting the petition to the Pension Fund Panel, divestment campaigner Mariette Labelle said:
“The latest IPCC report stresses that Climate impacts are already happening everywhere, faster, and with worse consequences than ever predicted. In light of the UK’s current energy policy and the global geopolitical situation, it is time to let go of our dependency on fossil fuels.
“The Pension Fund “engages” with BP, and Shell through their AGMs. No matter how much “robust engagement ” the Pension Panel has with these companies and however much “good corporate governance principles or climate change strategy” they display, engagement is very unlikely to work as the core of their business is to extract and sell fossil fuels for financial gain.”
“If engagement is so robust, why is it that Shell’s directors are currently being sued by environmental lawyers for failure to properly prepare for net zero? Any changes that may occur due to voting on motions once a year at an AGM will be too slow to avoid further climate breakdown.”
“It is no longer appropriate, in 2022, to invest in this sector to get good returns and secure long-term investments. In reality, given the very real risk of stranded assets and in light of the panel’s fiduciary duty towards its members, and the long-term nature of the fund as reflected in its own strategy document, continuing to invest in fossil fuels is not acceptable.”
Image above: Hounslow’s investment advisor,
LB Hounslow will not be making any “dramatic changes”
Karen Shackleton, an independent investment advisor to the London Boroughs of Islington, Camden and Hounslow, responded by saying she would not be recommending any “dramatic” moves ahead of Hounslow’s annual pension evaluation. The Pension Fund Panel defer to her advice.
“I think what I’ll just say is that pension funds are all on a journey here, and I suspect some of this discussion is around the speed in which we make changes. That is a fine balance between working out what to do and when, and what the implications are of changes.
Karen went onto praise some of the “significant changes” Hounslow have implemented to reduce the carbon metrics on the pensions portfolio. She said that the upcoming pension strategy review would be a “good opportunity” for panel members to revisit some of the pension investments and could consider aligning the brief with decisions made during the Paris climate agreement.
“Ahead of the annual evaluation I wouldn’t be recommending any dramatic moves because we don’t know what’s going to come out of the updated evaluation. The strategy review will bring the pension fund into line with the latest liability profile following on from that.”
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