Referral to Pensions Regulator and exposure of Committee members to legal challenge

We have an important update!  Fossil Free Oxfordshire has just been alerted to these facts by the environmental law organisation ClientEarth:

  • In December 2016 ClientEarth received legal opinions from two leading UK barristers that pension fund trustees who fail to consider climate risk in their investment strategies could be exposing themselves to legal challenge.
  • Oxfordshire Local Government Pension Scheme is one of a number of UK LGPSs that have recently been referred to the Pensions Regulator by ClientEarth and ShareAction. They have serious concerns about the way in which many LGPS funds are approaching the financial risks associated with climate change, putting scheme members’ savings at risk.

In the referral, Oxfordshire is identified as an LGPS that operates under the misconception that “By delegating day-to-day investment decisions to external investment managers, the administering authority has discharged its legal duties to manage climate risk.”

Oxfordshire LGPS could demonstrate to the Regulator that the Committee now recognises its duty and ability to consider and address climate risk at portfolio level by including a statement to this effect in its new Investment Strategy Statement (a document that all LGPSs have to submit by 1st April 2017). The Conservative-led Councils in East Sussex and Wiltshire have both taken such a step, and have included these statements in their Investment Strategy Statements:

“The Fund believes that climate change poses material financial risks to the Fund but that it also presents positive investment opportunities”. 

East Sussex County Council LGPS

“One area of focus for the 2017 strategy review is the risks caused by climate change and the associated issue of stranded assets. The strategy review will look at the carbon footprint of the Fund’s equity portfolio and consider reduction options, as well as conducting a temperature rise scenario analysis that may have implications for the Fund’s future asset allocation.”

Wiltshire County Council LGPS (draft ISS approved 1 March)

Oxfordshire LGPS could add such a statement to their ISS tomorrow at the Pension Fund Committee meeting. We urge them to do this!

It’s not divestment yet, but it’s a step in the right direction. Let’s hope they do the right thing tomorrow!

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