Pension fund says fossil fuel decision will have biggest impact on 'real world emissions'

The Shropshire County Pension Fund had faced calls from campaigners to sell its investments in fossil fuel companies – which it says only amount for 13 per cent of the carbon footprint of the entire fund.

But, at a meeting earlier this week the fund's committee rejected the call and instead voted to target 'net zero emissions by 2050 or sooner'.

Thomas Biggins, chair of Shropshire Council’s Pensions Committee said: "Pensions committee members agreed that targeting net zero would have the greatest overall impact on real world emissions, decarbonising the investment strategy, managing climate risk, and ensuring the fund keeps pace with the transition to the low carbon economy.

“This is because net-zero is an all-encompassing target that considers scope 1, 2, and when possible scope 3, emissions from all companies, regardless of sector.

"Noting that only 13 per cent of the fund’s total equity carbon footprint is attributable to holdings in energy stocks, with companies in the industrials, materials and utilities sectors contributing 68 per cent (based on analysis from the Fund’s 2021 Climate Risk Report).

“Furthermore, as a material first step to achieving the net-zero objective, pensions committee members agreed two immediate changes to the way the fund’s equities are managed. Both changes will have a material impact on the carbon footprint of the Fund and the type of companies invested in."

The two decisions were first to move around £130m out of UK equities into two sustainable equity managers.

A statement from the fund said: "These managers will invest in companies that enable the green transition alongside other companies that contribute to one or more of the UN’s Sustainable Development Goals (SDGs)."

The committee also moved around £700m out of a FTSE Developed index tracker with L&G into the Solactive L&G Low Carbon Transition Global Index fund.

In a statement the committee said: "This change will reduce the carbon footprint of these assets by c.50 per cent with a further seven per cent per annum reduction built in until net-zero in 2050, together with increasing exposure to companies that are enabling the green transition.”

Ahead of this week's meeting campaigners from Fossil Free Shropshire had staged a protest outside Shirehall, where the discussion was taking place.

Following the decision, Jamie Russell a spokesman for the group said they would continue to campaign on the issue.

He said: “We have been left in a state of shock and anger by this vote.

“The pension committee has ignored all the evidence that divesting from fossil fuels would be financially better for the fund’s profits and would help Shropshire meet its 2030 net zero pledge.

“This vote makes it painfully clear that Shropshire is not the climate leader it claims to be.”

He added: “We do not believe that the pension fund’s 50,000 members want their savings invested in companies that are financially volatile and wrecking the planet for their children and grandchildren.

“The fact that the fund didn’t consult them properly before taking this vote is an insult.

“We will continue to fight for the Shropshire County Pension Fund to pursue the bigger profits and brighter future offered by renewables.”