These investments cannot be justified on ethical, environmental or financial grounds, and they undermine MPs’ credibility in addressing the climate emergency.
The 2019 annual report for the £733 million MP Pension Fund shows that the fund remains heavily invested in Royal Dutch Shell (£8m) and BP PLC (£4.4m), despite hundreds of current and former MPs urging the fund to divest from oil and gas companies due to accelerating climate breakdown.
Compared to previous years, the fund’s holdings in fossil fuel companies have decreased due to the use of ‘low-carbon’ investment vehicles.
For the first time, 5 percent of the fund’s investments are dedicated to renewable infrastructure, which will help build wind and solar farms across the world.
The cross-party Divest Parliament initiative has repeatedly called on the trustees of the fund to end investments in fossil fuels, in accordance with the goal of limiting global heating to 1.5 degrees.
The campaign is supported by 360 serving and former MPs, including all Labour leadership candidates, the leaders of the Liberal Democrats and the SNP as well as senior Conservatives. Pension Minister Guy Opperman has also called on pension funds to take account of climate risk.
Under pressure from MPs, the fund committed to developing a new “Climate Change Investment Policy” but the policy has been delayed and no publication date is confirmed.
Caroline Lucas, Green Party MP for Brighton Pavilion, who has championed the cross-party Divest Parliament initiative, said: “Investing in clean energy is clearly the right thing to do, financially and for the future of our planet, so I’m glad the Parliamentary Pension Fund is doing this. But it has to also stop investing in Shell and BP.
Parliament declared a climate emergency nearly a year ago, and the parliamentary pension fund needs to fall into line with this by ending the support for fossil fuels.
These investments cannot be justified on ethical, environmental or financial grounds, and they undermine MPs’ credibility in addressing the climate emergency. They have to stop.”
With many newly elected MPs joining the Divest Parliament campaign, the consensus in Parliament to shift away from fossil fuels is growing.
Zarah Sultana, Labour MP for Coventry South, said: “The coronavirus pandemic is showing the devastating effects a major crisis can have to all areas of society. The climate crisis risks being even worse – unless we take urgent action.
Transitioning our economy away from fossil fuels is paramount and Parliament must lead the way, which is why I joined the Divest Parliament initiative as a newly elected MP. My pension shouldn’t be used to fuel the climate crisis and I call on the trustees of our MP pension fund to divest fully from fossil fuel companies.”
Aligning financial flows with climate targets will be a major theme at the UN climate summit in Glasgow in November. As the host nation, the UK must build international momentum for a rapid transition away from fossil fuels and towards a zero-carbon economy.
Mark Campanale at think tank Carbon Tracker, said: “2020 must mark a decisive turning point where trustees of private and public pensions funds stop fuelling the fire of the climate crisis through their business-as-usual investments in fossil fuel majors.
Some of these companies present grave risks to people’s pensions as coal, oil and gas risk becoming ‘stranded assets’ as countries align policy with containing global heating to 1.5 degrees and the cost of clean energy continues to plummet.
Even the Bank of England now plans to exclude fossil fuel assets from its purchases.”
Over 1000 institutions worldwide with assets worth over $14tn have cut ties with the fossil fuel industry as public anger grows at their role in fuelling climate breakdown.
In the UK, the Welsh Assembly Members Pension Fund recently committed to phase out all fossil fuel holdings by 2023. Divesting has never been easier: there is a growing range of “fossil-free” and zero-carbon funds which are generating robust returns.
Brendan Montague is editor of The Ecologist. This article is based on a press release from Divest Parliament.