A recent analysis conducted by environmental campaign groups Friends of the Earth and Platform London has uncovered significant investments in the fossil fuels industry by local government pension schemes in the UK.
According to data obtained through Freedom of Information requests, the analysis covered 75% of assets under management for the Local Government Pension Scheme (LGPS) for the financial year 2021/2022. The findings revealed that at least £12.2 billion was invested in fossil fuels, with £10.4 billion in England, £1.4 billion in Scotland, £227 million in Wales, and £28 million in Northern Ireland.
However, due to insufficient data for the remaining 25% of assets, the total investment in fossil fuels could potentially be as high as £16 billion, with over £8 billion allocated to companies involved in new oil and gas projects.
This revelation comes amidst a government consultation on climate risk reporting for the LGPS, with plans for implementation not expected before April 2024, according to a letter obtained by the PA news agency.
Environmental campaigners have criticized these investments, arguing that they undermine local efforts to achieve net zero emissions. They called on pension schemes to divest from fossil fuels and redirect investments towards a carbon-free future.
Jamie Peters, climate coordinator at Friends of the Earth, emphasized the role of local councils in climate action and urged them to reconsider their investments in fossil fuels.
The analysis also highlighted variations in fossil fuel investments across UK local government pensions, with some regions investing significantly more than others. While London and Wales have shown lower levels of investment due to local leadership support for fossil fuel divestment, funds such as the Greater Manchester Pension Fund and West Yorkshire Pension Fund continue to allocate over £1 billion each to fossil fuels.
Rob Noyes, a divestment campaigner and researcher at Platform, condemned these investments, stating that they divert public sector savings away from a green transition that is urgently needed.
In response, a spokesperson for the Local Government Association reiterated that investment decisions are made at a local level, taking into account fiduciary duties to members and taxpayers, as well as regulatory requirements set by the Department for Levelling Up, Housing and Communities.