Last Saturday 4th March, we collaborated with the Waltham Forest Labour Group to host an event for councillors and party members titled “Labour Divests: Learning from Waltham Forest Council”. We were aiming to share the learning from Waltham Forest’s decision in Sept 2016 to became the first council in the UK to commit to fully divesting its £660 million pension fund from fossil fuels.

So on a sunny Saturday, Labour councillors came from across London – and beyond the M25 from Harlow and Brighton – to hear about Waltham Forest’s experience and decision-making process.

We’ve managed to upload all the videos from the day – here.

Stella Creasy MP (Walthamstow) gave an overview of the importance of divesting public pensions from fossil fuels, and reinvesting into sustainable infrastructure. Cllr Clare Coghill, the incoming leader of Waltham Forest Council, placed Waltham Forest’s pensions pledge in the context of the council’s efforts to achieve clean air, including the Mini-Holland scheme.

Cllr Simon Miller – Chair of the Waltham Forest Pensions Committee – shared the practical experience of how his committee decided to divest. Natalie Smith, a financial lawyer with ClientEarth, explained the legal responsibility that pension committee members have to take climate risks seriously under their fiduciary duty, and Mika Minio-Paluello of Labour Energy Forum underlined the importance of divesting and reinvesting in building the new economy and responding to Brexit.

Cllr Simon Miller, Chair of Waltham Forest Pensions Fund Committee, described how the Committee undertook its decision to divest and assessed the risk of stranded assets:

“Divestment is an issue the Labour Party can lead on, and reinvestment gives us the power to create a future economy that works for us all. It makes no sense to invest in a sustainable greener future through initiatives like Mini-Holland, whilst continuing to invest in carbon – businesses that harm our environment and the quality of people’s lives.

The impacts of fossil fuels are not distant. There is a causal link between BP and air pollution from the A106 in my own ward.  

Our pension fund was in a mess – we had a whopping deficit. We were over-exposed to global equities. This meant we had to engage with our pension fund as a political priority, we had to restructure it. In the process, we looked at the risk of stranded assets. Some financial advisers claimed that oil would spike in the short-term, that fossil fuels will pay dividends for the next years. But we have to think long-term.  Fossil fuels companies like BP and Shell will see their reserves become stranded assets. As a fund, we don’t have the luxury to risk stranded assets. Maybe other better funded funds can afford that risk. For Waltham Forest – not divesting stopped making sense.

Many pension funds are frozen by orthodoxy. They feel dependent on part of the financial services industry, that justifies the existing economic model. But when we asked two simple questions – the answer became clear:

  • Could we meet our fiduciary duty and run a diversified portfolio, without investing in fossil fuels? The answer was yes.
  • Can we invest in a sustainable future, and meet our fiduciary duty? The answer was yes.

In committing to divest, and to reinvest separately into sustainable solutions, we are ensuring a better, long-term future for pension members. We already have £45 million in a green investment fund, including in wind. We also want to invest in commercial property, and ideally in residential property. Vast numbers of people are currently living in substandard housing – we can influence this, if we are the owners.

This is a Labour issue. You cannot have social justice without a green sustainable future. And we need a sound investment strategy to ensure it.”

Stella Creasy MP for Waltham Forest explained  that Divestment should be a powerful tool for the Labour Party in sending a message about the the kind of society and economy we want.

“Divest should be a UK Labour agenda: We need to own this territory of leftwing sustainable growth. It shows when people come together they can transform the world around them. We recognise that we have to leave 80% of fossil fuels in the ground in order to meet the 2 degree target – so the message we send by not doing something, by “business as usual” is also significant.

Our Parliamentary Pension fund has a massive holding in BP. It’s effectively a question of using our collective purchasing power for social justice ends. Local government can offer hope to us in Parliament. I’m committed to make this happen.

Brexit is horrendous, but we should seize its opportunities. eg setting social impact target from investment and procurement, through Social Value Act.

Divestment has a powerful economic case, pensions are a massively important part of our economy, we want to see our pensions grow in value, and the safest route for this is to divest and reinvest in a sustainable future.

As Labour, divest is a tool in our armoury. It’s about doing both the right thing and the bright thing.”

Our own energy economist Mika Minio-PaIuello spoke about how the financial imperatives to divest from fossil fuel companies are clear, and this opens up space to reinvest in a progressive democratic clean energy future. Shifting the transition towards 21st century technology, making energy cleaner and much more affordable, whilst creating jobs.

“We bemoan weak productivity in the UK, and the lack of patient capital. We say we can’t build sustainable infrastructure, social housing, public transport and clean energy – because we don’t have the patient capital. We go begging for foreign investment and to the City. And yet – we’re sitting on £250 billion of patient capital, in the form of local government pension funds.

If we want to build new industries, create jobs and deliver a 21st century energy future – let’s use public sector wealth to drive the new economy – and deliver safer pensions. This is about building a future that works for all of us

Labour councillors Waltham Forest and Southwark have lead on divest. Labour across London should build this into our 2018 elections campaign – and demonstrate that we have a brave vision for a future and a pathway to it.

And Labour councils need to team up on the new London CIV to make sure we have good fossil free funds to invest into.”

Natalie Smith of Client Earth laid out the legal imperative for divestment. The financial risks posed by climate change must be taken into consideration – this is a legal duty on councillors. Climate risk has financial implications for the return on their funds and this must be considered by the pensions administrators because of their fiduciary duty.

This legal responsibility cannot be passed onto fund managers, it lies with the pensions administrators. Indeed, soon Pension Regulators or Pensions Ombudsmen could see cases being brought to them, if local authorities ignore their legal responsibility to consider the financial risks from climate change – we are seeing examples of this happening in the US already.

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Thanks to everyone who came!


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