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Rule change could lead to Buckinghamshire County Council divesting from fossil fuels

December 18, 2017 10:16 AM
By Gareth Davies, party chairman
Originally published by Buckingham Liberal Democrats

The government is to allow Britain's public-sector pension schemes to dump their shares in oil, gas and coal companies, as part of the fight against climate change.

This affects us in Buckinghamshire, where the Lib Dems have been campaigning for several years to persuade the county council, which administers pensions investments on behalf of employers across the country, to get rid of its shares in fossil fuels.

Bucks County Council invests £107million of these pension funds in fossil fuel companies.

The Guardian report today that the government is to introduce new investment regulations that will allow pension schemes to "mirror members' ethical concerns" and "address environmental problems".

This means that if employees don't want their pensions invested in the big oil companies, helping them continue to drill for oil, thereby contributing to and accelerating global warming, then the Buckinghamshire Pension Fund Committee will have to listen to them and consider dropping those investments, putting them instead in renewable energ

The Buckinghamshire Pension Fund Committee manages the Buckinghamshire Local Government Pension Scheme on behalf of 218 employers across the county, including Bucks County Council, Milton Keynes Council and the District Councils. The £107million investment makes up a not insignificant 4% of the available pension pot.

Three years ago Lib Dem county councillors Avril Davies and Steven Lambert asked the county council to divest from fossil fuel companies, as part of the fight against climate change.

The county replied that they were governed by national legal regulations which forced them to get the best return for contributors to the pension fund, irrespective of the threat of climate change and other environmental concerns.

It repeated that defence in November (2017) after figures emerged showing the local authorities' pension funds' investment in fossil fuels, including the £107 million from Buckinghamshire.

At the time John Chilver, the County Council Cabinet Member for Resources, said:
"Legal opinion … states that Pension Fund Committees cannot place ethical and other social, environmental and governance factors above the requirement to maximise the investment returns for a given level of risk."

Now it appears that the government has listened to campaigners and will introduce new investment regulations that will allow pension schemes to "mirror members' ethical concerns" and "address environmental problems".

The rules are expected to come into force next year after a consultation period.

However divestment from fossil fuel companies is not a done deal. Another argument defenders of the status quo use is that it is better to continue to hold shares then divest, as a way to influence the oil majors (as shareholders), and persuade them to change their ways. However there appears to be no hard evidence of this approach has worked.

John Chilver used it in November. (He's not commented on today's news.)

"The Committee believe that engaging with their investee companies on all issues to deliver long term change delivers a more responsible investment approach than a blanket decision to divest from any group of companies."