22. Pension Funds: Divestment from fossil fuel extraction

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Conference
Date
June 16, 2017
Decision

Conference acknowledges the importance of well sourced pension schemes that provide reasonable returns so that members can live with dignity after retirement. Conference acknowledges the value of legislative changes that allow trade union representation on pension boards as a positive step.

Conference recognises that the threat of global warming to our environment and to the wellbeing of the world’s population has been neglected by the UK government and that immediate actions are required to limit the damage that is already taking place. Conference recognises the Scottish Government’s ambitious targets to reduce carbon emissions but notes that the UK Government has failed to adopt similar targets.

Local Government Pension Funds (LGPF) in the UK have assets worth over £230 billion. At least £14 billion of this – over 6% – is invested into fossil fuel corporations.

Pensions are for our and our families’ future. But that future is threatened by fossil fuel extraction. Without bold action to keep 80% of fossil fuels in the ground, a changing climate will have devastating consequences for people, societies and ecosystems around the world.

With this investment in fossil fuel extraction, our local governments are providing resources that accelerate climate change. As public bodies, councils have a responsibility to work for the public good (in Scotland statutory climate change duties); they should not be financially and politically supporting the most destructive industries on the planet. Fossil fuel investments undermine existing local authority climate change mitigation; adaptation strategies and commitments.

Making 4.6 million public sector pensions dependent on long term profits from an industry threatening a safe planetary future is not a sensible investment strategy. When local governments allow pensions to be exposed to fossil fuels, they are relying on stranded assets for the safe retirement of their workers.

As continued investments in fossil fuels pose material financial risks to portfolios, funds have fiduciary duties to consider the benefits of decarbonising as part of their investment strategies. Furthermore, trustees may consider non-financial factors if members share the concern and there is no risk of significant financial detriment to the fund – which is increasingly the case for divestment.

By divesting the £14 billion currently invested in fossil fuels, local councils can take an important step forwards in challenging climate change. Reinvesting this money into renewables, housing and public transport is a feasible and sensible strategy for providing a long term return and building safe pensions for public sector workers.

As well as providing safer long term returns for pensions, all of these would create local jobs, improve the lives of local residents and boost local economies more than investing into multinational fossil fuel companies.

Conference agrees to:

  • Campaign for divestment from fossil fuel extraction for all pension funds where we have members and we can argue it is in the fiduciary interests of scheme members;
  • Seek alliances amongst other trade unions who share our objective and work co operatively with them to achieve divestment;
  • Engage with UNISON members with an aim of improving their knowledge base around climate threats created by fossil fuel extraction;
  • Produce literature that will enable branches to engage with the employers where they are members of a LGPF.

Scotland Region

NEC POLICY: SUPPORT AND AMEND


22.1

Insert new sixth paragraph:

“Conference notes that UNISON is the largest staff union in the UK gas industry and welcomes attempts by the UNISON energy service group executive to investigate hydrogen with carbon capture storage (CCS) as an alternative to gas in the UK’s supply and distribution pipe network to UK households.”

National Executive Council


22.2

Insert new eighth paragraph:

“Conference notes fiduciary duty is defined by the Law Commission as ‘ensuring that pensions can be paid, ensuring that this is undertaken at the best possible value’. Conference therefore agrees to ensure that before any UNISON campaign for disinvestment takes place, the campaign must ensure that there is no short term economic damage to each pension fund and that an economic strategy for re-investment of the disinvested assets is identified to ensure no long term damage to each fund and the ability to pay pensions.”

National Executive Council


22.3

Delete 4) and replace with:

“4)  Produce literature on fossil fuel divestment that will enable branches to engage with the employers where they are members of a LGPF.”

Hastings & Eastbourne Healthcare

NEC POLICY: SUPPORT