Green Party raises ethical concerns over council pension fund investments in fossil fuels
South Tyneside Council (STC) formally declared a ‘climate emergency’ in 2019 and pledged to become ‘carbon neutral’ by 2030.
But this commitment has been called into question due to the companies the Tyne and Wear Pension Fund, which is run by the borough council, has chosen to back.
“I gather the Tyne and Wear Pension Fund currently holds some investments in the fossil fuel sector,” Green Party councillor David Francis told a meeting of the full council.
“I appreciate local authorities have a responsibility to ensure their funds deliver the best possible returns for their employees.
“But according to Unison’s guide to local government pensions ‘in recent years pension funds that have divested from fossil fuels have financially outperformed those which remained invested in fossil fuels.”
He added: “It’s time for us to consider living up to our climate change commitments, think very carefully about the precarious future of these investments and stop investing in fossil fuels.”
The pension fund’s annual report for 2018/19 showed of its ten largest investments in individual companies, its joint third was £27million in international mining firm Rio Tinto. It has a further £21 million invested with British American Tobacco.
The fund has also backed renewable energy providers, including EnfraGen, which provides hydro and solar energy in Latin America, and the Bioenergy Infrastructure Group, which uses waste destined for landfill to generate energy.
“I know Coun Francis has a drum to beat and he beats it every meeting, but I thought he might thank us for good financial management,” said Coun Ed Malcolm, cabinet member for resources and innovation, responding to Coun Francis.
“Climate change is accepted as a significant financial risk, but it doesn’t mean we should divest from all fossil fuel companies.
“The position of the pension fund is one of active engagement to improve environmental practices, complimented through ongoing work with companies and voting at annual general meetings (AGMs) to change companies’ approaches.”
He added the council would breach its ‘fiduciary duty’ to the fund if it made decisions based ‘purely on ethical views’.