Labour councillors in a London borough are leading the way in respond to the threat of stranded fossil fuel assets, and building a sustainable new economy and society.

 

Waltham Forest Pension Fund became now the first in the UK to commit to excluding fossil fuel shares, over a five year time-frame, in a committee meeting in late September. Simon Miller, the Chair of the Pension Fund Committee and Councillor for Leyton, explained

“Waltham Forest Pension Fund is proud to commit to divesting from fossil fuels. Not only does this mean that the fund will not be invested in stranded assets, but will be actively investing in cleaner, greener investments to the benefit of our community, borough, and environment.”

The pension fund is worth £735 million and currently invests £23.9 million in the oil and gas industries.  The decision was backed by all four Labour councillors on the pensions committee, who managed to bring the single Conservative councillor on the committee on board as well.

According to council officers, the fund has already begun investing into wind and renewable energy earlier in 2016. The same meeting agreed to ‘seek to make direct commercial property investments in the borough’.

One of the Labour councillors on the pensions committee, Yemi Osho, spoke at our Labour Divests event at Labour Conference last week, explaining that

“It’s time for us to act. Fossil fuels present a clear threat to future pensions, as action on climate change becomes more necessary. By divesting from oil and gas, we will protect pensions for council employees. Fossil fuels also have a devastating impact on many communities – so our action will also have a positive impact on health and wellbeing.”

Barry Gardiner, the Shadow Secretary of State for Energy & Climate Change, also mentioned the Waltham Forest decision at our fringe event. He spoke after Yemi, adding that

“Oil companies are overvalued. We know that there is 5 times more oil  and gas than we can burn, if we are to avoid busting thru climate limits. If fossil fuel companies are over- valued, there will be a glide path where share prices shrink to a more appropriate value.”

In other words, the price of oil companies will fall – producing a risk to exposed pension funds. In the Waltham Forest Pensions Committee meeting that decided to divest,  the Bank of England Governor Mark Carney’s warning was taken seriously:

“Take, for example, the IPCC’s estimate of a carbon budget that would likely limit global temperature rises to 2 degrees above pre-industrial levels. That budget amounts to between 1/5th and 1/3rd world’s proven reserves of oil, gas and coal.
If that estimate is even approximately correct it would render the vast majority of reserves “stranded” – oil, gas and coal that will be literally unburnable without expensive carbon capture technology, which itself alters fossil fuel economics.
The exposure of UK investors, including insurance companies, to these shifts is potentially huge.”

Waltham Forest, Simon Miller and Yemi Osho deserve kudos and credit for taking leadership on this issue and marking a precedent.

Other pension funds run by Labour councils have also taken steps towards decarbonising, including South Yorkshire, Hackney and Haringey.

The question is – who will be next?


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