With a quick email action, you can help push for a Climate Change Policy with teeth that will have a real impact on how public pension money is invested.
How to respond to the consultation: The short version
Responses should be sent by email to email@example.com, stating whether you are responding as an Oxfordshire tax-payer or as an LGPS member.
There is more detail on the Climate Change Policy and consultation process in the long version below but, if you are pushed for time, below are key points you could usefully make in your response to the consultation, if you agree with them.
1.We ask that the Pension Fund’s investments be aligned with the Paris Agreement’s aim to keep global temperature rise below 2 degrees C and as close as possible to 1.5 degrees rather than consistent with governments’ Paris pledges which are predicted to produce unsafe temperature rises of 2.9 degrees or more.
2. We ask that the Fund divests from (sell all shares in) all fossil fuel companies which continue to extract further fossil fuel reserves because
a) fossil fuel companies that are driving the climate crisis so public money should not be invested in them
b) divestment sends a clear message to governments and to the companies themselves that driving the climate crisis is morally unacceptable, so fits with the Fund’s stated goal to “influence policy in the climate change arena”
c) divestment would protect the fund from the well-documented risk of falling share value.
3. We ask that the Fund supports engagement (using investors’ position as shareholders to push for change) with non-fossil fuel companies, aimed at aligning their business with below 2 degrees warming.
4. Clear and measurable criteria are needed to assess companies’ alignment with a less than 2 degrees scenario. The climate change policy needs to be clearly enforced and actioned by these inclusion/exclusion criteria.
The longer version
Oxfordshire Local Government Pension Fund has made great strides in developing a Climate Change Policy that recognises a need for the Pension Fund to align its investments with the Paris Agreement and its ambition to limit global warming to well below 2 degrees C. The draft policy is out for consultation until 15th May, and you can respond by emailing Sean.Collins@oxfordshire.gov.uk.
We at Fossil Free Oxfordshire are broadly in agreement with the stated aims of the Policy, but have concerns about some crucial details. We encourage our supporters to respond to the consultation, and in this blog we offer our views on what a response might include. The consultation document details how to respond, and invites comments on the following issues (see paragraph 23 of the consultation document). Fossil Free Oxfordshire’s views on these are shown in italics below each point.
- The use of the Paris Agreement to act as the guiding principle for the Climate Change Policy. Are there alternative strategic drivers better suited?
We support the use of the Paris Agreement to act as the guiding principle for the Climate Change Policy. However we think that the pension fund needs to be very clear that the objective of the fund is to be compliant with the objectives of the Paris agreement i.e. consistent with limiting global heating to less than 2C rather than just consistent with the current government pledges under the Paris Agreement which scientists believe will result in unsafe heating of between 2.9C and 3.4C . This principle places limits on the use of many investment vehicles by the pension fund.
- The decision not to include any blanket divestment statements within the Policy but to focus on a practice of engagement and selective divestment across all asset classes and sectors where sufficient evidence of compliance with the Paris Agreement is not forthcoming.
We agree that engagement and divestment are not mutually exclusive – indeed they are intrinsically interlinked. Engagement must be underpinned with clear criteria, metrics, timelines and the sanction of divestment for companies whose performance does not meet stated criteria within the timeline. Otherwise it acts as an excuse for the same stalling and greenwash we have seen from oil companies for decades, and which has led organisations such as the National Trust to divest.
A divestment policy applied to the fossil fuel industry would be powerful in the following two respects:
- It would align the fund with the values of pension scheme members who have principled moral objections to the actions of the fossil fuel industry which has done, and continues to do, unequivocal harm to the world. The Unison survey suggested LGPS members object in principle to their pension being invested in unethical industries.
- It would align with the Fund’s goal to “influence policy in the climate change arena” by stigmatising the fossil fuel industry, undermining its social license to practice and encouraging government to strengthen legislation against it.
Engagement can be a highly effective approach with companies whose business models can be adapted to respond to the climate crisis. We agree that it is not too late for some companies who are not currently aligned with a 2 degrees scenario to adapt.
However, any companies whose business plans include continued exploration and extraction of new reserves of fossil fuels could not be said to meet any reasonable criteria for 2 degree-compliance. Any engagement process that employed credible criteria would surely exclude such companies. Any engagement/divestment policy that does not lead to their exclusion in the very near term, is self-evidently inadequate.
- Whether the focus on climate change risks relative to the other risks facing the pension fund is appropriate, and whether there should be greater emphasis on any of the other UN Sustainable Development Goals or risks.
We think that climate change poses by far the most significant set of risks to the pension fund, so the focus on that is appropriate. We recognise that there are also other risks that should be considered, but that the main emphasis should remain on climate change.
- Potential metrics to be included in any future iterations of the Investment Strategy Statement and Climate Change Policy against which compliance can be assessed.
The Church of England Commission used the Transition Pathway Initiative’s assessment of the energy sector which led to immediate divestment from all but two fossil fuel companies. We would support such divestment by the Oxfordshire as a first step towards an investment policy which will eventually be consistent with limiting global heating to less than 2 degrees C. (Further steps to divest fully from fossil fuel companies would be required at a later stage given none has a business plan consistent with that objective.)