Scottish local authority pensions have more than £1.2bn invested in fossil fuels companies, according to a new report by environmental campaigners.
Friends of the Earth Scotland criticised the councils for declaring a climate emergency yet still having investments in coal, oil and gas firms.
Scotland’s council pension funds are valued at £48bn, which “constitutes the country’s largest public store of wealth” according to the report.
The report found the “worst offender” was the Strathclyde Pension Fund, with more than £508m invested in fossil fuel companies such Exxon, BP and Shell.
The fund is operated by Glasgow City Council on behalf of East Ayrshire, South Ayrshire, North Lanarkshire and South Lanarkshire and its own council.
Lothian Pension Fund had the second largest investment into fossil fuels at £165m, followed by the North East Scotland Pension Fund at £124m.
Tayside Pension Fund was found to have invested £118m in polluters, while Falkirk Council’s pension fund invested £97m into fossil fuels. Fife followed at £70m, the Highlands with £46m and Dumfries and Galloway at £31m.
The Shetland Isle Pension Fund invested £20m into these types of companies, while the Scottish Borders Pension Fund only invested £16m and the Orkney Isles Pension Fund was the lowest at £9m.
The information came from Freedom of Information requests by Friends of the Earth and Platform.
BP, Shell and mining company BHP – which accounted for 40% of the total investments made by each of the funds into these companies – are ranked among the top 20 biggest climate polluters in history, according to a Carbon Majors study.
The stock value of fossil fuel-based companies has fallen in the past few years. The report claims that £194m of value was wiped off the oil and gas investments of the Scottish councils between 2017 and 2020.
The Strathclyde Pension Fund alone lost £46m, with the Lothian Pension Fund following second with a loss of £36m.
Last year, Lothian and Strathclyde pension funds both announced they will no longer invest into fossil fuel companies’ debt.
Ric Lander, divestment campaigner at Friends of the Earth Scotland, said: “Local councillors have the opportunity to show leadership on climate action by telling fund managers to divest from fossil fuels.
“Many local authorities have declared a climate emergency and have plans in place to bring down emissions from transport, buildings and waste. Pension fund investments are currently working against this progress by continuing to back the ageing fossil fuel economy.”
Responding to the report, Strathclyde Pension Fund said: “Strathclyde Pension Fund recognises the climate emergency and is clear that, in addition to the obvious risks it presents for everyone on the planet, it presents specific risks for investors.
“Historically, the fund has felt that divestment is a blunt tool in terms of securing that transition to a low carbon economy and not on its own radical enough to have a meaningful impact on the climate emergency.
“Instead, it has preferred to be an activist investor – pushing for improvements on everything from carbon disclosure and lowering emissions, while committing hundreds of millions of pounds into a range of renewable energy projects.”
Fife Council’s head of finance Elaine Muir said: “Our pensions committee works to a set of investment principles, these are in place to ensure investment managers consider the social, environmental and ethical policies of companies in which they invest.
“We are committed to a balance between maximising investment income and ethical investment, which is why we employ Federated Hermes – their team helps monitor our investments in companies and intervene where necessary with the aim of improving our long-term corporate performance.
“We’ll continue to closely monitor our investments, making sure members of the pension scheme receive the best possible long-term return while taking full account of our wider ethical responsibilities.”
A spokeswoman for Dumfries and Galloway’s pension fund stated: “The principal objective of the fund is to ensure that scheme members and their dependants receive all benefits as and when they become payable – in light of this objective, the fund has considered socially responsible investment in the context of its legal and fiduciary duties and obligations.”
They explained the fund invests into trusts that have a diverse portfolio that also includes renewables and there is no direct investment into these companies.
The spokeswoman added: “The pensions sub committee has taken the view that non-financial factors should not drive the investment process at the cost of financial return on the fund – it does not actively disinvest in companies for ethical, social or environmental reasons as this may impact on Fund returns and would not agree with the principal objective.”
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