Scottish Local Gov’t Pension Schemes holds over £1.2bn in fossil fuel companies

Scotland’s Local Government Pension Schemes (LGPSs) were found to hold at least £1.2 billion in fossil fuel companies, according to a new report from the Global Ethical Finance Initiative, a leading organization promoting sustainable and responsible investment practices.

The report examined the £16.4 billion in direct listed investments in major companies held by Scotland’s LGPSs, which represents around a quarter of the combined £61.3 billion in total investments held by the 11 Schemes on behalf of around 1 in 7 adults in Scotland.

The holdings in companies whose business model was primarily focused on fossil fuels, such as producers and fossil fired utilities, represented around 2% of their total holdings. The findings also indicate that £3.1 billion, equivalent to 5% of the total assets, was invested in companies heavily involved in fossil fuels and/or deforestation.

On a positive note, Scotland’s Local Government Pension Schemes also hold £2.0 billion, accounting for 3% of their total assets, in companies that have been identified as clean energy leaders. The LGPSs all emphasise the role of active engagement with the companies whose stock they hold, as opposed to simply selling the stock to improve the outward appearance of their portfolios.

9 out of the 11 LGPSs in Scotland actively participate in responsible investment initiatives, such as the Principles for Responsible Investment or the Institutional Investors Group on Climate Change.

Scotland’s Local Government Pension Schemes are administered by local councils, with 10 out of the 11 council areas in Scotland having already declared a Climate Emergency. This emphasizes the urgency and importance of addressing environmental concerns and adopting sustainable investment practices within these pension schemes.

These pension schemes are of significant importance to the Net Zero transition, as they cover approximately one in seven adults in the country, including local council workers, and civilian staff of public services such as the fire service and police.

The release of this report comes at a time when sustainable pension funds face scrutiny over allegations of green washing and is an important contribution to transparency in the public sector pensions sphere.

Report co-author Sam Wheldon-Bayes said: “This report highlights the degree to which the retirement funds of Scottish workers are invested in the fossil fuel industry. While engagement with companies is important, they must make sure their investment holdings are consistent with the government’s Net Zero targets. The recent release of the UK Government’s Green Finance Strategy offers an opportunity to rethink public sector pensions.”

Source Global Ethical Finance Initiative


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