"By investing in fossil fuel extraction, our local governments are profiting from climate change..."
As Greater Manchester Combined Authority and local councils, including Salford City Council, urge a switch to green policies, the financial elephant in the room is the huge amounts invested in fossil fuels by the Greater Manchester Pension Fund, which looks after £17,182,862,772 worth of public sector workers' money in the region.
Across the UK, £295billion of retirement funds for around six million people in 97 different local authorities is controlled by public pension funds, and how they invest that money has become a huge issue as it influences the economy. In recent years, pressure has been put on the fund administrators to divest, or take their money out of fossil fuel companies to help stop the acceleration of climate change.
A new report out this week, with authors from 350.org, Platform, Community Reinvest and Friends of the Earth England, Wales and Northern Ireland, and Scotland, reveals just how much of these pension funds are invested in fossil fuels. And the Greater Manchester Pension Fund tops the UK league for both the highest proportion of assets invested in fossil fuel companies and the highest amount invested.
From its fund value of over £17billion, the GM Pension Fund invests 10.2%, or £1.75billion in fossil fuels, £800million more than the second placed West Yorkshire Pension Fund.
"Local councils bear the responsibility of looking after their workers in their retirement" states the report authors "Everyone has a stake in how pension funds are invested and council pensions, managed with input from our elected local councillors, have a major role to play in creating a pensions industry that is not just paying out pensions, but also making sure we will have a future worth retiring for.
"Councils have an opportunity to break away from the short-term thinking of the financial sector and move towards an investment practice that takes on the biggest challenge of our age: climate change" they add.
While six pension funds in local government schemes across the UK have already committed to cut their fossil fuel investments - the Environment Agency Pension Fund, Haringey, Hackney, Waltham Forest, Southwark and South Yorkshire - Greater Manchester is named and shamed as the "worst offender" in 'fuelling the fire'.
Fossil fuel companies named in the report and heavily invested in by the GM Pension Fund are BP (£275million) and Shell (£285million), both involved in fracking and environmental scandals. Other fossil fuel investments include Rio Tinto Ord (£144.4million), Anglo American (£115.2million) and Centrica Ord (£78.2million).
"By investing in fossil fuel extraction, our local governments are profiting from climate change" state the report's authors "As public bodies, local governments have a responsibility to work for the public good; they shouldn't be financially and politically supporting the most destructive industry on the planet.
"Fossil fuel investments undermine existing local authority climate change mitigation and adaptation strategies and commitments" they explain "Although most major companies have now ceased to openly deny climate change, the industry still ploughs $100 million every day into exploring for new reserves and maintains that it will not be prevented from burning its existing reserves.
"UK-based oil companies BP and Shell are planning for a world warmed by 3-5°C or more" they add "The fossil fuel industry shows no sign of attempting to change its
behaviour to adapt to the risks of climate change... By divesting from fossil fuels, councils and other public institutions can collectively stigmatise the fossil fuel industry, challenging the power these companies hold over our planet, economy and politics, and call for action on the climate crisis."
Instead, the report states, public pension funds should be investing in new technologies... "electric cars, wave power and floating wind can bring green jobs to our communities whilst investment in green housing and insulation could house millions and cut fuel poverty...
"The need for action is urgent in order to avert the environmental and economic costs of climate change and to rebalance the economy to one which provides decent work" it concludes "Council pension funds can back this change by shunning fossil fuels and investing in green jobs."
To read the full report and get involved in the divestment campaign – click here
See also previous Salford Star article on GM divestment – click here