Oxfordshire Pension Fund: Fiddling While the Earth Burns

On the morning of the 24th of September we took our campaign to Oxfordshire County Hall. Accompanied by a fiddler, we met county council employees on their way into work to highlight how those who invest their pension fund are fiddling while the earth burns as climate change takes hold.

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Photo: Zoe Broughton

We were drawing attention to the fact that Oxfordshire County Council has £55,609,000 of public money directly invested in fossil fuels through the Local Government Pension Scheme, a figure that increases to £119,694,000 once indirect investments are taken into account. Using data released by Fossil Free UK we can see that 7.18% of the Oxfordshire Pension Fund is  invested in fossil fuels, greater than the 6.22% national average invested by local authorities.

Oxford City Council was the first UK local authority to make a divestment commitment, and we are calling on Oxfordshire County Council who administer the pension fund to follow suit. Fossil fuels are causing irreversible changes to the climate and they are now proving to be financially dangerous with Mark Carney, governor of the Bank of England, warning that investors face “huge losses” from the fossil fuel industry .

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Photo: Zoe Broughton

We encourage all members of Oxfordshire Local Government Pension Scheme to write to Councillor Lilly, chair of the pension fund committee, and call on the committee to divest their funds from fossil fuels and pursue more ethical investment opportunities.

Our action was covered in the Oxford Mail and Oxford Times and on Jack FM. Council spokespeople, including Councillor Lilly himself, responded with three misleading assertions that we would like to challenge:

  1. “Oxfordshire Pension Fund has nothing at all to do with Oxfordshire County Council”

First, they appear to distance themselves from responsibility for the fund, claiming – bafflingly – that the pension fund has “nothing at all to do with Oxfordshire County Council” and is “administered by the county council but it is not actually run by the authority.” While it is true that the fund assets are not owned by the County Council, this is a red herring: the fund is administered by a committee made up predominantly of elected members of the county council. We have been fed the same line in the past, and on seeking clarification on the point, we were advised by the leader of Oxfordshire County Council, Ian Hudspeth, that “The Pension fund committee set the general principles of investment for the fund.”  

If it is not a matter for them, then why did the following happen?

  • The Leader of the County Council agreed to receive the 1200 signature-strong petition calling for divestment in February 2015
  • We have twice  been invited to address the Pension Fund Committee on the matter of fossil fuel investments. At the Pension Fund Committee in June 2015, Councillors discussed divestment from fossil fuels at some length.
  • The County Council’s Chief Finance Officer prepared a paper on Corporate Governance and Socially Responsible Investment that considers in some detail the arguments for and against fossil fuel investments. It concludes that “The emphasis should therefore remain on challenging the Fund Managers to ensure that they are properly researching all investments, along the lines suggested in the [Carbon Tracker] Blueprint document, and that they are in a position to justify their decisions on individual investments.”
  1. “The county council can’t impose its own social, environmental or ethical views when making investment decisions.”

While it is true that the County Council cannot invest on ethical grounds only, a Law Commission report states that they can take into account ethical factors.

The CFO’s paper itself states: “The Law Commission has stated though that trustees can make investment decisions on non-financial factors, as long as there is no risk of significant financial detriment.”

  1. “We have a legal duty to invest in the best financial interest of pension fund employers and beneficiaries.”

Our point precisely! We have argued all along that fossil fuel investments are not only bad for the climate, they are risky economically. In asserting that the pension fund has a legal duty to invest in the best interests of the fund’s members, the council’s spokesperson quoted in the Oxford Mail article, Paul Smith, supports the case for divestment: investing in fossil fuels is risky and therefore at odds with that duty.

Many establishment figures are warning that fossil fuels could become the sub-prime assets of the future: The Governor of the Bank of England has warned that the vast majority of reserves are unburnable and has launched a major enquiry into this risk. Similarly, the President and the former Chief Economist of the World Bank, and the UN’s top climate change official have issued warnings of stranded assets. HSBC recently advised its clients against investing in fossil fuel companies on the grounds that they will become “economically unviable.” The real question is why the Pension Fund Committee is not taking more urgent action to protect LGPS members from the looming “carbon bubble.”

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Photo: Zoe Broughton

We reiterate our call that for the good of the planet and the pension fund beneficiaries, the Oxfordshire Local Government Pension Scheme divest from fossil fuels and will continue to campaign for our local authority to take the lead in transitioning away from these damaging and dangerous investments. If you are an Oxfordshire LGPS member, please speak up and  add your voice to the call by writing to Councillor Lilly here.

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