Pension fund aims to ‘engage’ with fossil fuel companies, not divest from them – Notts TV News

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Councilor Eric Kerry (Con) Chairman of Nottinghamshire County Council Pension Fund
By Anna Whittaker, Local Democracy Journalist

Divesting from fossil fuel companies is a “last resort” – and engaging with them to become greener is the priority, an adviser said.

Nottinghamshire County Council’s pension fund manages £6.4billion in pension funds for 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.

Councilor Eric Kerry (Con), chairman of Nottinghamshire County Council’s Pension Fund Committee, described the thinking behind the authority’s strategy.

He said there is pressure for fossil fuel companies to switch to clean energy – but they need the committee’s funds and influence to do so.

He said the Local Authority Pension Funds Forum (LAPFF) also believes that “engagement is key”.

Cllr Kerry added: “We think that – and divestment is the last resort.”

Climate activists Extinction Rebellion have previously called on the committee to end “immoral financing” of fossil fuels and divest from certain companies.

By September 2021, around £170m had been invested in energy and fossil fuel businesses and £291m in sustainable and renewable businesses.

But the council says the figure for fossil fuel companies is likely to be overstated, as it also includes renewable energy companies.

So far, the board has not directly divested from fossil fuel companies, but it has “changed the allocation strategy” to put more money into sustainable investments.

It’s something the authority plans to do more of, Cllr Kerry told the Local Democracy Reporting Service.

He said: “By deliberately not investing in certain energy companies as they transition, it is reverse greenwashing because we are taking money away from a company that will ultimately deliver better environmental outcomes.

“Shell, for example, is now investing in electric pumps at its stations and they will sell less fuel and more green energy.

“We believe responsible investing, and that means engaging with all of these companies, is the best way to make the climate transition a success.

“BP and Shell are spending the money they make and investing it in the transition and we are helping them fund that.

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

He added that at a recent annual general meeting of energy company Xon, the board voted against the board – saying it wanted new directors who “specifically understood climate change”.

Cllr Kerry said: ‘If we can help them implement a transition plan we will get 1.5C better than if we sell the business and let them do whatever they want.

“Our policy is engagement. We want them to switch to clean energy and energy companies have funds to invest in the transition.

He added that the council had asked LGPS Central – which manages the assets of the Nottinghamshire pension fund – to set up a new £230million sustainable fund.

The fund will provide “sustainable long-term investments”.

Cllr Kerry added: “We’re not going to do it all overnight, but it’s a start.”

Another goal of the fund is to eventually become 100% funded.

Cllr Kerry explained: ‘We are still not fully funded, which means we don’t have the cash in the bank to pay all of the expected pension liabilities for all the decades to come.

“But we are moving in the right direction and we have gone from 87% a few years ago to 93%, practically under my presidency.

“Our strategy is to increase our returns on investment so that we can recover to be 100% funded.”

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