Agenda item

Councillor Martin Fodor, Redland Ward, Green Party addressed the Committee. A copy of his statement is attached as an online appendix to these minutes, a summary is set out below.

Divestment is the common term for making investments free of fossil fuels. Calls for private and public funds to divest have grown around the world thanks to pressure from activists - with some investors and bankers belatedly waking up to the drastic impact of drilling, mining and burning fossil fuels on the global climate. The pace has been accelerating as the evidence of climate breakdown grows. Warnings from scientists to stop releasing greenhouse gases are ever more urgent. 

For investors there’s also a serious risk of ‘stranded assets’ as stocks based on expectations of continued extraction permanently lose their value when the minerals have to stay in the ground.

What analysis has the fund done of the recent price crashes and revaluations of assets in the fossil fuel based investments held by the fund? How certain are you that you are not risking exposure to stranded assets?

The fund invests through the Brunel Pensions Partnership. In January 2020 Brunel gained headlines for a new policy:

“between now and 2022, Brunel will demand that their material holdings take steps to align their emissions with Paris benchmarks ….

Those that fail to do so will face the threat of votes against the re-appointment of Board members, or being removed from Brunel’s portfolios when the partnership carries out a stocktake of its policy’s effectiveness in 2022.”

This seems like good news. But the Paris carbon commitments are nowhere near good enough. The UN found that if every country follows through its commitments under the accords, the result would be global heating of over 3 degrees by the end of the century. This would cause catastrophic runaway heating of the planet.

Continuing to invest in big polluters while merely sending letters or threatening votes just delays alternative approaches. Many campaigners took the announcement by Brunel as the start of divestment. But apart from a gradual placing of some new funds into lower carbon stocks it wasn’t. And despite confirmation at the Fund’s June 2020 meeting that these ‘greener’ investments had been more successful through the pandemic than the traditional fund holdings - no increase was approved.

There’s therefore another dimension you need to assess: reputational risk. The fund represents local authorities who have all declared a climate emergency and this stance is backed by the largest staff union, Unison, as you know. At the same time the eyes of the world will be on action underway in the UK this autumn with the Conference of the Parties in Glasgow.

Are you prepared for further scrutiny as Paris commitments get left behind?

It was a surprise to me when in September 2020 Bristol was credited in international press, following a C40 cities press release that claimed Bristol City Council supports divestment. Was the Avon Pension Fund equally surprised?

Among the official C40 declaration there are clear commitments to:

“Take all possible steps to divest city assets from fossil fuel companies and increase investments in climate solutions”

“Call on pension funds to divest from fossil fuel companies and increase financial investments in climate solutions.”

Bristol’s own specific commitments amount to: 

“…support our staff pension fund, the Avon Pension Fund, in its objectives to reduce fossil fuel investment and increase sustainable investments.”

“…call on Avon Pension Fund to set out a clear timetable and set of metrics as part of its review of its alignment of its portfolio with the Paris agreement“

It’s debatable whether you’ve done even this – maybe you could confirm the timetable?

As a Green I think an emergency requires action not just ‘monitoring’. This committee should:

- Publicly commit to accelerate the action by APF, to revisit the Brunel Partnership Investment Strategy and its 2year delay. We need to demand a target of net zero by 2030 – the same as our climate emergency target. When will you align with the commitments by all the constituent authorities?

- Inform the workforce of other options for shifting funds out of fossil fuels over a 5 year period, highlighting the benefits of this compared to risks of stranded assets.

- Direct the APF to innovate by putting some of its funds into community energy projects, and dramatically stepping up funding into cleaner energy and diversifications tried elsewhere eg the new Renewables Infrastructure Funds.

The Chair thanked Councillor Fodor for his statement and said that a written response to the questions and points raised would be sent to him in due course.

Alasdair Yule, B&NES UNISON Branch Green Officer, addressed the Committee on behalf of B&NES UNISON Branch, Bristol UNISON Branch, North Somerset UNISON Branch, Bath Spa University UNISON, Bath University UNISON Branch and the University of the West of England UNISON Branch. A copy of his statement is attached as an online appendix to these minutes, a summary is set out below.

The September 2020 Investment Strategy Statement (ISS) states the Avon Pension Fund will ‘use the Fund’s power as a shareholder to encourage change’ in the companies in which it invests, to support the transition to a low carbon economy, and align with the Paris Goals.

It also states that “If engagement does not work ahead of the Paris Stocktake in 2023… the fund… will consider selective divestment from laggard companies”.

Please can the committee report on the following;

·  Has the fund identified which companies in which it invests are engaging in fossil fuel extraction and fossil fuel energy production?

·  How is the progress those companies are making towards decarbonisation being measured?

·  Has the fund begun the process of assessing which, if any, of those companies will be considered for selective divestment ahead of the Paris Stocktake in 2023, owing to their insufficient progress towards meeting the 2015 Paris Agreement?

·  If not, when does the fund plan to begin the process of identifying these laggard companies?

We emphasise that burning all the oil and gas from currently operating fields would take global warming beyond 1.5°C. It is imperative to stop all new fossil fuel infrastructure and fossil fuel industry expansion.

There is a strong financial case for divestment from fossil fuels to avoid future losses. Studies show that fossil fuel use will peak in the 2020s, after which investors in the industry should expect significant losses. Increasing numbers of investors are divesting from fossil fuels, purely on financial grounds.

Divestment from companies that base their business model on fossil fuel extraction can be aligned with the fiduciary duty of the Fund to scheme members.

The Chair thanked Alasdair Yule for his statement and said that a written response to the questions and points raised would be sent to him in due course.