ONE of Scotland’s largest public sector pension funds has come under fire after its fossil fuel investments increased 40% in one year.
New data shows the Lothian Pension Fund is investing in BP, Chevron, Exxon and Shell, as well as mining giant BHP.
And there are fears that there is an “inertia of inaction” without a move to divest from fossil fuels.
The Lothian Pension Fund, overseen by Edinburgh City Council, is among a record number of signatories to a joint statement by global investors calling on governments to urgently step up efforts to deal with the crisis climate.
The Investor Agenda 2021 Global Investor Statement to Governments on the Climate Crisis contains the collective views of 587 large investors from around the world, representing approximately 40% of global assets under management.
And in June, a new “responsible investment principles statement” from the pension fund states that “climate change is undoubtedly one of the defining issues of our time” and that its commitments for the future include cessation “Primary investments in companies which are not aligned with the objectives of the Paris agreement”.
Nearly 200 countries ratified the Paris climate agreement at COP21 six years ago, agreeing to continue their efforts to limit the increase in the planet’s temperature to 1.5 ° C above pre-industrial levels.
But research has found that the pension fund’s investments in fossil fuels have increased by £ 64million since 2020 and now stand at £ 229million.
The rise in value is believed to be the result of a rebound in shares of fossil fuel companies with the easing of the lockdown.
In June, the International Energy Agency (IEA) said global demand for oil would rebound to pre-pandemic levels by the end of 2022, as recovering economies force oil-producing countries to pump more fossil fuels.
Shell is one of the owners of the controversial Cambo oil field off the coast of Shetland, which campaigners are currently fighting to stop moving forward.
The study conducted by Friends of the Earth Scotland compared the investment fund to the Carbon Underground 200 – a list of the largest owners of carbon stores.
Climate activists from the Divest Lothian campaign group staged a protest outside Edinburgh City Chambers on Monday to demand that the pension fund withdraw this money from investments they say are fueling the climate crisis.
The Lothian Pension Fund is the second largest local government pension scheme in Scotland and manages the pension funds of over 84,000 members of Edinburgh City Council and three other Lothian local authorities. It also manages pensions for 90 employers, including Scottish Water, Edinburgh Napier University, Lothian Buses and Heriot Watt University.
Iain Struthers of Divest Lothian said: “It is deeply inconsistent and morally unjustifiable for Edinburgh City Council to position itself as a zero carbon city by 2030, but not to mention ceding its fossil fuel interests.
“Stakeholder engagement will never change the basic business model of polluting companies. Divestment is an essential step in accelerating the just transition towards a sustainable future for all.
Sally Clark, Friends of the Earth Scotland divestment campaigner, said: “The Lothian pension fund is directly invested in continued fossil fuel research through its £ 229million investment in companies like BP, Shell and BHP. This undermines the City of Edinburgh’s commitment to tackle the climate crisis.
“As Scotland prepares to host COP26 in less than a month, Scottish councils have a vital opportunity to show climate leadership by ending their pension fund investments in companies that are destroying the planet. Similar funds such as the Cardiff, Lambeth and Waltham Forest pension funds have already pledged to forgo fossil fuels and now is the time for the Lothian pension fund to join them. ”
Campaigners pointed out that since Edinburgh City Council pledged to become a zero carbon city by 2030 and Midlothian, West Lothian and East Lothian councils have declared “the climate emergency” in 2019, the Lothian pension fund “continued to profit” from some of the coal, oil and gas companies most responsible for the climate crisis.
It comes as Extinction Rebellion activists plan to hold a protest in the streets of Edinburgh this month in the context of the COP 26 climate conference in Glasgow.
The 26th United Nations climate conference will see world leaders visit Scotland to discuss the way forward to tackle environmental issues.
But, Extinction Rebellion describes the conference as “systematically corrupted by vested interests” and vowed to do its best to disrupt the proceedings.
The militant group has sent Edinburgh City Council a notification of its intention to hold a protest parade through the streets of the capital on October 31.
Edinburgh City Council has been approached for comment.