Divestment must be part of Birmingham’s Climate Plan

We are pleased to sign up to a letter from Cllr Lisa Trickett and CANWM to Birmingham City Council pushing for release their Climate Emergency Plan. There is very little time left for Birmingham to start making the emissions cuts vital to securing a livable future for all humans on Earth.

Birmingham City Council must urgently release this plan, and the plan must include divestment of all fossil fuels from the council pension (WMPF) and other investments. It is pointless to cut local CO2 emissions while funding companies who drill for oil and lobby policymakers to rollback regulations.


Here is the full letter (from here):

Dear Colleague

On Tuesday 15th September a report on Birmingham City Council’s response to the Climate Emergency is being presented to the full Council meeting. The Council declared a climate emergency in June 2019 however the Council are still not able to publish an action plan. It is vital that we create a sense of urgency and ambition to deliver a just climate transition for all our communities.

The civic family in Birmingham have come together alongside councillors and residents representing the breadth and depth of community interest in our City in a collective call to action for a just transition in Birmingham.

The attached call to action has been endorsed by a spread of civic society, green networks and grassroots organisations with cross-cutting community representation in their membership. The full list of organisations is set out below.

For those of us who are part of the Labour movement you would be heartened to know that the call to action has been endorsed by Midlands TUC, FBU, GMB WM, Unison WM, Unite and Birmingham District NEU.

We are in the process of collating the names and numerous individual responses from across the city suffice to say we have frontline workers, owners of small businesses, academics, entrepreneurs, and politicians from across the region.

In considering the report tomorrow we ask you to hear the collective voice of Birmingham’s civic community amplified through this call to action and seek a way forward that shares our ambition to create a socially just, thriving, zero carbon city. Thank you to those fellow Councillors who have already stepped forward and supported this call to action. We look forward to hearing from many more of you.

Solidarity

Lisa

Acting with the following organisations who have endorsed the call to action:

Climate Action Network West Midlands (co-sponsor of the call to action) Midlands TUC, GMB WM, Unison WM, Unite, FBU, Birmingham Youth Climate Strikers, Greener Birmingham Coalition, Friends of the Earth Birmingham, Circular Economy Club Birmingham & The Midlands, Community Energy Birmingham, Extinction Rebellion Birmingham, LGND Brum, Ecobirmingham, Sustainability West Midlands, TAWS, The Junk Food Project Birmingham, Green Lane Mosque, Birch Network, Globally Local, Let’s Grow Together, 1000 Trades, Places in Common, Brum Baby Bank, Slow Food Birmingham, Eat Make Play B16, Link Road Community Collective, Jai Jagat 2020UK, Central England Quaker Climate Emergency Action, Footsteps – Faiths for a Low Carbon Future, Eco Sutton, The Pound Project, Divest West Midlands Pension Fund, Companions for Hope.

Young People Will Not Have Their Future Stolen

When young people learnt that 40% of their exam grades were to be downgraded, it was striking to see protesting students holding placards reading “Give us fair grades not broken futures” and “How can I value a system that doesn’t value me?”. Leaders are failing young people on exams, and they are failing them on climate breakdown. This is a generation which will not roll over and have their future stolen, and this week has shown us that when they rise up, they are unstoppable.

And yet their future is still being overlooked by councils across the country as they continue to green light huge investments in fossil fuels which are driving the climate crisis and denying them a safe future. Here in the West Midlands, despite calls to divest from fossil fuels, councillors sit in pensions committee meetings and rubber-stamp a destructive policy of investing in these dirty fuels. They greenwash this policy by instead “engaging” with the fossil fuel companies, despite any evidence that this will make any difference to their fundamental business model, without any targets and without any sense of the urgency of scaling down these investments. The failure of “engagement” is demonstrated this week by a huge spike in Facebook advertising spend to convince Americans of the need to keep burning oil and gas following climate policy announcements by presidential candidate Joe Biden. If BP and Shell are serious about their climate pledges, why are they still fighting climate policy?Ef3El4tXsAAsLrc

How are pensions holders benefiting from these investments? Traditionally pensions funds like investing in fossil fuels because of dividend, but this year Shell cut dividend payments by 66% and BP cut dividends by half. WMPF is also at risk of a price crash. In 2015, the price of coal collapsed, costing local government pension funds £683 million in losses.

The fossil fuel industry knows it is threatened by combination of falling renewable technology costs and climate policy by governments. This has driven a welcome but decades-late net-zero pledge by BP.  Companies like BP do not change their ways when pension funds ask them politely.  They do, however respond when divestment starts having a material impact on their bottom line. They do respond when they can’t hire staff because their toxic business model is exposed by divestment.

Divestment protects local government pension holders and the taxpayers who underwrite their pensions. Divestment sends a strong message to the market that society will not tolerate the climate being destroyed by their actions. And divestment protects young people in the West Midlands who expect to be treated fairly and who will not stand for a degraded planet ravaged by the lethal effects of global heating.

Why is the West Midlands still funding the climate crisis?

The Covid-19 pandemic has put colossal pressure on the fossil fuel industry. In the last few months oil prices have gone negative and then bounced back to hover at a very low price. Major oil companies like Shell, BP and Total have announced their reserves are worth much less than expected, wiping billions off balance sheets. Profits have been cut, and share prices have slumped.

Meanwhile, divestment campaigns targetting Local Government Pension Funds around the Midlands have seen successes. In the past few weeks, two councils have passed divestment motions:

  • Shropshire Council (Tory-controlled) voted in support of a divestment motion calling on the county pension fund to divest from fossil fuels over a 3 year period
  • Chesterfield Borough Council unanimously passed a motion yesterday calling on the Derbyshire Pension Fund to divest from fossil fuels and to engage better with members on investments

Significantly, both of these funds are members of the LGPS Central pool, putting pressure on West Midlands councils to push West Midlands Pension Fund to divest the £ millions that it invests in fossil fuels.

We look forward to more councils in the West Midlands joining Dudley and Birmingham in stepping forward to call on WMPF to divest from fossil fuels.

The divestment motions make interesting reading, both referencing the climate emergency motions recently passed by their respective councils. We look forward to hearing from councillors in Wolverhapton who have similarly passed a climate emergency motion but have yet to call for divestment.

The text of the divestment motions passed by Shropshire and Chesterfield councils are copied below.

DivestWMPF would like to thank and congratulate the campaigners who have pressured their councils into passing these motions, and we stand in solidarity with them as they push for their Pensions Committees to update their investment strategies to formalise divestment commitments.

West Midlands Pension Fund Pensions Committee claim that continuing to invest in fossil fuel companies and “engage” with them is responsible. It is not. It is financially reckless and ethically unjustifiable. Growing numbers of people are realising that the best way to preserve our future is to divest before it is too late. We hope WMPF will join them.

Shropshire Motion

Council notes:

  • Shropshire and Telford & Wrekin Councils have both declared climate emergencies and pledged to be net zero by 2030.
  • Shropshire County Pension Fund (SCPF) currently has around £294 million invested in fossil fuel companies including Shell and BP and through asset manager BlackRock.
  • These investments are incompatible with the climate emergency declaration and the councils’ commitment to reach net zero within the next ten years.
  • Fossil fuel investments are financially risky as a result of both the Covid19 pandemic and the global transition to a more sustainable economic and environmental model. They are now being consistently out-performed by renewables.
  • Former Bank of England Governor Mark Carney warned in December 2019 that fossil fuel investments risk becoming “stranded assets” (i.e., worthless) as investors exit the sector. “A question for every company, every financial institution, every asset manager, pension fund or insurer – what’s your plan?”
  • The ‘engagement’ approach does not mitigate the financial risks the sector faces. There is also no evidence of any multinational corporation changing its core business model in response to investor pressure.

Council believes it is time for Shropshire’s flagship pension fund to commit to divestment from fossil fuels over a three year timeframe.

This would:

  • Allow for the development of ‘impact investment’ directed towards internationally recognised sustainable development goals and/or investment in a local sustainable economy.
  • Provide for a more sustainable future of all pension fund stakeholders.
  • Provide leadership in the face of the climate emergency.

This Council resolves:

To instruct the Acting Chief Executive to write to the Pension Fund Committee asking the Committee to follow best practice by;

  1. Adding a statement to their strategy that climate change constitutes financial risks to the fund.
  2. Setting a 3 year timescale for the reinvestment of funds currently invested in fossil fuel dependent assets.
  3. Developing an investment strategy consistent with sustainable development goals and developing a local sustainable economy.

Finally we recognise that fossil fuel investments constitute part of the councils ‘carbon footprint’ and so resolve that this element should be reported on within our greenhouse gas reporting for Scope 3.

Chesterfield Motion

Having declared a Climate Emergency, this Council commits with the Derbyshire Pensioners Group, Transition Chesterfield, Friends of The Earth and Divest Derbyshire in calling for the Derbyshire Pension Fund to disinvest its remaining funds in Fossil Fuels companies and to invest in Renewable Energy companies instead.”

In addition we are calling for the Derbyshire Pension Fund to strengthen engagement regarding future investment principles with all stakeholders including pension fund members and employers.

Dudley Council Votes to Divest from Fossil Fuels

Last night, Dudley Council voted unanimously on a cross-party motion calling on the council’s pension fund to divest from fossil fuels, demonstrating a commitment to action on climate change and reducing the financial risk to pension members.

The motion, which was tabled by Councillor Pete Lowe, received full support from across the council members. It follows a trend of councils passing motions to divest from fossil fuels. This is amid growing concern about the impacts of climate change and a responsibility to reduce financial risk for pension members.

In his speech Councillor Lowe said:

“Tackling such a colossal challenge requires action at all levels – international, national, and local. That is why I have decided to bring this motion forward.”

Labour Leader in Dudley Cllr Qadar Zada said:

“We all have a responsibility to play our part in reducing carbon emissions and this motion will put further pressure on fossil fuel companies to put more effort into the adoption of renewable energy. Our message is simple pollution doesn’t pay.”

Councillor Simon Phipps who successfully tabled a Conservative amendment to the motion said:

I’m so pleased that this motion attracted the unanimous support of Dudley Council. Climate change is the biggest threat facing our society and public organisations have a responsibility to lead change. Members of the pension fund should now be given the opportunity to see that this course of action will not detrimentally affect the fund financially. I hope that the members of the Fund will see that this is the right thing to do, as this will help to ensure that the West Midlands is a leading region in the quest for a carbon neutral society.

Vigil outside the Council House

Prior to the meeting a vigil was held outside Dudley Council Chamber, relaying to councillors the wide public support for divestment. The vigil was organised by the group Divest West Midlands Pension Fund (DivestWMPF) and Dudley Green Party. DivestWMPF have been campaigning for the fund to remove its investments in fossil fuels for four years.

Kay Edwards, from DivestWMPF, who is a Dudley resident and pension fund member said:

“We are delighted that Dudley have voted for this motion which will build momentum for the West Midlands to end destructive fossil fuel funding. Shell, BP and other fossil fuel companies have no place in public pension funds, as they continue to pour investment into new oil and gas projects.”

West Midlands Pension Fund, is one of the top 25 institutional pension funds in the country, and has an estimated £490 million  invested in fossil fuel companies. These companies are continuing to invest  in new projects which undermine climate targets and put shareholder returns at risk.

This motion follows a trend in the UK. So far 12 councils have passed motions committing to divest their pensions from fossil fuels, including Birmingham City Council who committed to divestment in July 2017. The motion follows increasing local concern about the climate emergency. In September, 3,000 protestors gathered in Birmingham, and protests were also held in Wolverhampton, Dudley and other locations all around the West Midlands, with demands for more urgency in tackling climate change.

DivestWMPF are continuing to call for the other local councils in the West Midlands Pension Fund including Wolverhampton to add their voices to the call to divest the Fund from fossil fuels.

Dudley to Divest?

On 7th October, Dudley Council will vote on a motion to divest the pension fund from fossil fuels. This important resolution will demonstrate Dudley is committed to playing its part to solve the climate crisis. It is also a really smart policy as noted in a letter to the Financial Times:

Fossil fuel-free investing is, in fact, low-risk and profitable. The financial numbers on the fossil fuel industry’s market performance no longer add up. It has lost its competitive edge. To maintain market share the oil and gas (and coal) sector flouts the rule of law, confounds fair play, ignores shareholder concerns, distorts science and frustrates political discourse. All to advance a weak economic rationale from a bygone era. The divestment movement uses protest as a political device to open a new consensus on low-carbon initiatives. Corporate boards are the battlegrounds for debate because the fossil fuel industry has succeeded in undermining the Paris Agreement and any policy proposal that runs counter to unbridled exploration and development.

We hope all the parties in Dudley MBC will join together to support this crucial motion.