Briefing for pension fund holders

What are we asking for?

We are asking for the West Midlands Pension Fund to stop investing your pension money in fossil fuel companies. These are companies which find and extract oil, coal and gas – for example Exxon, BP, Shell, and Total. Moving money away from these companies is known as divestment,

Why are we asking this?

Climate change threatens all of us. In the UK it will cause flooding – which damages homes, businesses and infrastructure; heatwaves – which can harm the health of vulnerable people; and an increase in extreme weather events. Globally, climate change will affect water security, agriculture and economic resources, increasing the risk of conflict and humanitarian crises.

While climate change is already happening, taking fast action to reducing warming even by half a degree will have a major impact. We know that most of the world’s oil, coal and gas reserves will need to stay in the ground if we are to avoid the worst impacts of climate change.

Just 100 companies have been responsible for over 70% of global emissions since 1988. While some fossil fuel companies talk a lot of talk about renewable energy, in reality they spend less than 3% of their annual capital expenditure on renewables projects. Trying to engage with these companies to get them to change what they are doing has not worked.

The aim of divestment is to weaken the political influence of the fossil fuel industry, which keeps holding back action on climate change. Every time an institution publicly breaks its ties with fossil fuel companies, we chip away at their power to carry out their immoral business plans.

For more detailed information see our Fossil Fuel Majors report.

How much is invested in fossil fuel companies by the pension fund?

The West Midlands LGPS Pension fund currently has over £490 million invested in the oil, coal and gas industries. This is about 3.5% of the pension fund.

Is anyone else doing it?

Over 1000 different institutions around the world, representing funds worth over $11 trillion, have made some form of divestment commitment. These include cities, pension funds, universities and faith institutions.

Will divesting have a negative effect on my pension?

While the overall amount of money invested is £490 million, because there are a lot of people in the pension fund it’s only 3.5% of each individual pension. Increasingly there is a strong financial argument for divestment. It’s not only the right thing to do, it’s also the financially sensible thing to do.  Fossil fuel companies pose a financial risk for a variety of reasons including climate legislation, environmental challenges, changing resource landscapes, falling renewable energy costs, evolving social norms and consumer behaviour, litigation and changing statutory interpretations. The majority of their reserves run the risk of being unexploitable and turning into stranded assets.

For more information see IEEFA’s report ‘The financial case for fossil fuel divestment’.

What could the money be used for instead?

We think that in future this money could be invested in local projects, creating local green jobs and making the West Midlands a better place to live.

Alternatively, plenty of mainstream alternative investment options also exist which have no or very low fossil fuel investments. One example is fossil-fuel free indices, which can equal or perform better than indices with fossil fuels in them.

What can I do

If you are currently paying into the LGPS, or you have deferred benefits, or you are getting a pension from them, you can write to the pension fund in support of divestment. Please let us know you have done this and if you get an response. Please also join our mailing list to keep up to date with the campaign.