The Nuclear Free Local Authorities (NFLA) welcomes the recent decision made by councillors on Inverclyde Council to pass a resolution urging the Strathclyde Pension Fund (SPF) to commit to ethical investments. It is part of a growing trend in local government calling on ways to ‘divest’ from the likes of fossil fuels and nuclear weapons and invest in renewable energy and other ethical alternatives.
Whilst Inverclyde Council is not a NFLA member, it is very welcome that it is taking these issues seriously. Inverclyde Council becomes the fourth Council that is a member of the SPF to pass a resolution on such matters – following on from NFLA members Renfrewshire, West Dunbartonshire and East Ayrshire Councils.
The Inverclyde Council resolution reads as follows:
“The Strathclyde Pension Fund is known to hold shares in 11 of the world’s 20 biggest arms manufacturers, including some involved in the production or maintenance of nuclear weapons or their delivery systems. Any investments in nuclear weapons producers are at odds with the Treaty for the Prohibition of Nuclear Weapons (TPNW).
Inverclyde Council calls on Strathclyde Pension Fund:
- to work towards eliminating current and future financial exposure to companies that are involved in arms manufacturing, giving due regard to fiduciary duty.
- to adopt a statement of investment principles that explicitly set out the pension fund position on key Environment, Social and Governance (ESG) issues including climate change, human trafficking, child labour, the arms industry, tax avoidance and workers’ rights.
- to systemically assess the risks associated with their investments concerning ESG policies.
- to set targets for positive, responsible investment in specific sectors, including low-carbon infrastructure, housing, and low emission transport.” (1)
It is noted that the Strathclyde Pension Fund has over 250,000 members and £20bn of investments. It is one of the biggest local government pension scheme funds and one of the top 20 UK pension funds. The NFLA Secretary, the NFLA Scotland Vice Convener and a member of the group ‘Don’t Bank on the Bomb Scotland’ (2) have met with a senior official in the SPF and held a wide-ranging discussion. The SPF argue that they do engage actively with companies on ESG issues but are opposed to specific divestment policies which they argue are not as effective as a policy instrument.
Councillors across Scotland, England, Wales and Ireland are actively engaging with their Pension Funds around the issue of divestment. As well as resolutions on encouraging divestment from arms companies, many Councils have also passed climate emergency resolutions which call for divestment from investments in fossil fuel companies. An active debate is taking place across many Council Pension Funds, as well as in the university and faith sectors.
NFLA note a new report by the environmental campaign groups Platform and Friends of the Earth which shows that, at the end of the 2019/2020 financial year, local government pension funds had almost £10bn invested in fossil fuels. This research also found that fossil fuel businesses accounted for 3% of the total value of the Local Government Pension Scheme. (3)
There remains an active discussion on the benefits of divestment, and in this area some councils have already committed to fully divesting from fossil fuels, including Clwyd, Southwark, Islington, Lambeth and Waltham Forest. Southwark have noted divestment had helped it improve returns.
These matters are being considered across the world, most notably and recently in New York, which last month voted in favour of dumping fossil fuel investments, selling off an estimated $4 billion in holdings. (4) In addition, comments made by leading global policymakers, such as the previous Bank of England governor Mark Carney, are increasingly raising concerns that fossil fuel investments will lose value as economies switch to renewable energy as part of curbing global warming. (5)
NFLA welcomes this discussion on possible divestment from Council pension funds on their investments in areas like nuclear weapons or fossil fuel companies. NFLA is keen to see a wider debate over protecting the pensions of retired members whilst investing in an appropriate and ethical way, taking full account of the fiduciary duty of the pension fund.
NFLA Scotland Convener, Councillor Feargal Dalton, said:
“I welcome the resolution passed by Inverclyde Council and three of the NFLA members of the Strathclyde Pension Fund, which shows the real need for a fuller debate about the investments made by it. All Council Pension Funds need to balance the need for a good rate of return with the ethical needs and views of its members and of the Councils that underpin it. Divestment is a discussion that is very much worth taking place in local government and I welcome councillors bringing it forward to their own pension funds. Positive, ethical change from investments in nuclear weapons and fossil fuels is a worthwhile step that all pension funds need to be considering. NFLA encourage them to consider making such a change as soon as is practical.”
Linda Pearson, from the Don’t Bank on the Bomb Scotland group said:
“We congratulate Inverclyde Council for passing this important resolution. Investing in nuclear weapons producers is at odds with the Treaty on the Prohibition of Nuclear Weapons, as the resolution states, and Strathclyde Pension Fund’s investment policies should reflect the fact that nuclear weapons are now banned under international law. It’s clear that there is growing opposition to Strathclyde Pension Fund’s unethical investments from its own member councils and we support Inverclyde Council’s call for the fund to divest from companies involved in arms manufacturing, including those involved in nuclear weapons production.”
Ends. For more information please contact Sean Morris, NFLA Secretary, on 00 44 (0)7771 930196.
Notes to Editors:
(1) bInverclyde Council media release, 2nd March 2021
(2) Don’t Bank on the Bomb Scotland analysis of Scottish Council Pension Funds
(3) Platform / Friends of the Earth report on Councils and divestment, 23rd February 2021
(4) Reuters, January 25th 2021
(5) BBC News Online, December 29th 2019