Notts pension fund aims to ‘engage’ with fossil fuel companies – not divest from them

Divesting from fossil fuel companies is a ‘last resort’ – and engaging with them to become greener is the priority, a councillor has said.

The Nottinghamshire Council pension fund looks after £6.4 billion of retirement pots of 145,000 members, including council workers, teachers and the police.

The pension fund has previously come under fire from campaign groups for investing in fossil fuel companies.

Counr Eric Kerry, council pension fund committee chairman, said there is a push for fossil fuel companies to transition to clean energy – but they need the funds and influence of the committee to do this.

Coun Eric Kerry outside County Hall, Nottinghamshire Council's headquarters in West Bridgford.

He said the Local Authority Pension Fund Forum also believes ‘engagement is key’.

He said: “We believe that – and divestment is the last resort.”

As of September 2021, about £170 million was invested in energy and fossil fuels companies and £291m in sustainable and renewable companies.

However, the council says the fossil fuels figure is likely to be overstated, as this also includes renewable energy companies.

So far, the council has not directly divested from any fossil fuel companies, but has ‘changed the allocation strategy’ to put more money into sustainable investments – and Coun Kerry said this is something the authority plans to do more of.

He said: “By deliberately not investing in some energy companies as they transition, that is reverse greenwashing, because we are taking money out of a company which will ultimately provide better environmental results.

“Shell, for example, is now investing in electric pumps on their stations and will be selling less fuel and more green energy.

“We believe responsible investment – and that means engaging with those companies – is the best way of achieving climate change transition.

“BP and Shell are spending the money they earn and putting it into transitioning and we are helping them fund that.

“We care about climate change. We also care about other things like human rights, just transition and people’s standard of living.”

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Climate change

He said that at a recent annual general meeting of the energy firm Xon, the council voted against the board of directors, specifying they wanted new directors who ‘specifically understood climate change’.

Coun Kerry said: “If we can help them implement a transition plan, we will do better than if we sell the company off and let them do whatever they want.

“Our policy is engagement. We want them to transition to clean energy.”

He said the council has asked LGPS Central – which manages the fund’s assets – to create a new, sustainable fund, to deliver ‘long term sustainable investments’, with £230m.

Coun Kerry said: “We’re not going to do everything overnight, but this is a start.”

Another goal of the fund is to become 100 per cent funded.

Coun Kerry said: “We’re not fully funded, which means we haven’t got the cash in the bank to pay all the expected pensions liabilities for the decades ahead, but we are going in the right direction and have grown from 87 per cent a few years ago to 93 per cent.

“Our strategy is to increase our investment returns, so we can claw back to be 100 per cent funded.”

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