A row has erupted over demands that Bristol City Council’s pension scheme sever ties with fossil fuel companies. Green advisers want the Avon pension fund to sell all of its investments in the oil, gas and coal industries, insisting it’s ‘fantastic’ to believe net zero can be achieved by pledging with them and that the 6,000 local authority employees should have a vote to decide .
But the council’s representative on the local pensions board, Labor leader Cllr Steve Pearce, said it was ‘not a binary issue’ as some of the biggest renewable energy companies were once traditional fossil fuel giants. And he said most of the world’s leading green energy providers still derive a small part of their revenue from resources like coal, so divesting themselves of those companies would mean withdrawing funding from businesses essential to low-carbon goals. .
The authority’s human resources committee has been told the local government’s £5billion Avon pension fund, to which thousands of staff across the four West of England councils contribute and out of which they count towards their retirement, owns £4.1 million of stakes in the five most established oil and gas companies. gas multinationals – Total, Chevron, BP, Shell and Exxon. But that equates to just 0.2% of the fund’s listed equity portfolio and just 0.07% of total assets, members heard.
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However, Green Cllr Katy Grant told the meeting that the need to move away from fossil fuels was urgent and that Avon’s program commitment to carbon neutrality by 2050 should be brought forward 20 years as it did not reflect not the council’s climate emergency and the 2030 net zero goal. She said: “It’s strange that Bristol isn’t the loudest voice on this. There are many city councils and large pension funds across the country that have done much more and there’s no reason the Avon Pension Fund can’t be one of them.
The Clifton ward councilor said a survey of council staff should be carried out to decide whether to divest from fossil fuels, a request the committee agreed to pass on to Mayor Marvin Rees and his Labor cabinet. Tom Merchant, branch secretary of Unison Bristol, the council’s largest union, told the meeting he supported the divestment following a vote by members two years ago, but warned that the response from all employees might not necessarily be what the Greens would expect.
He said: “There is a danger in doing a staff survey. If he comes back with a no, that will change our branch policy. Divestment is not a binary thing. Much depends on what you’re trying to accomplish – if it’s to divest yourself from fossil fuels, there will be unintended consequences that you may not like.
He said renewable energy company Orsted still derives 2% of its revenue from legacy fossil fuel assets. “Are you really going to say you’ll never invest in this renewable energy company because they get 2% of their revenue from fossil fuels?” Councilor Pearce asked.
He said less than a tenth of one percent of the pension fund‘s total assets belonged to the Big Five fossil fuel companies and were held as part of a passive index fund used for collateral purposes. Cllr Pearce said: “We hold this tracking fund because it’s better than holding cash because cash always depreciates in value and a tracking fund doesn’t. So it’s a way of covering our exposure.
“The problem with divestment is that if you say you’re moving away from investing in fossil fuels, you’re also saying you won’t invest in most renewable technologies either. The largest investor and supplier of green hydrogen in Europe is Shell. Do you really not want to invest in green hydrogen?
“Unfortunately you are not. We have no money invested in Shell other than this fund which we use as collateral. One of the biggest investors in solar energy is Lightsource BP, which is 50% owned by BP It’s not a binary issue You have to be very careful what you wish for.
Curator Cllr Richard Eddy said: ‘I’m not exactly a green so I have a lot of sympathy for what Cllr Pearce is saying. Retirement benefits are a key part of employee benefits and we want to make sure they are compensated properly.
“The main role of the representative on the board is to advocate and ensure that pension benefits are sound, paid and properly invested – that’s the main role, not to be politically correct about it.” Cllr Grant said at the town hall meeting on Thursday April 28: ‘There are renewable energy companies out there that have nothing to do with fossil fuels so it’s not about not investing in this sector by divesting itself of gas or coal.”
The committee was examining the annual report of pension fund Avon which said that £1.2 billion, or 23%, of its assets were invested in sustainable and low-carbon stocks as of March 31, 2021, with £148 million additional pounds in renewable energy and infrastructure assets such as wind and solar projects.