Many of the councils most devastated by the winter floods are amongst the largest investors into fossil fuels.
Storms Desmond, Eva and Frank battered communities across Scotland, Wales and the North of England throughout December, destroying homes, infrastructure and lives. Council workers and public sector officials were on the frontlines, trying to stop the floods and cleaning up the damage afterwards.
Public sector workers in Manchester, York and elsewhere are now discovering that their pensions are accelerating climate change – as they have been invested heavily into fossil fuels.
- Greater Manchester Pension Fund tops the list, with over £1 billion of council workers’ pensions invested into companies like BP and Shell – almost 10% of the total.
- York – where thousands had to evacuate after flood gates were opened – holds 7.2% of council workers pensions’ in fossil fuels with coal mining company Rio Tinto the largest holding.
- South Ayrshire – where 12 people were dramatically rescued by a helicopter after their bus was swept aside and stranded by floodwaters – participates in the Strathclyde Pension Fund, with over £750 million in fossil fuels.
- Over £670 million of West Yorkshire’s pot – which covers pensions for public employees from flooded Leeds – is in oil, gas and coal.
- Cumbria was hardest hit by Storm Desmond in early December, with thousands rescued by lifeboats and causing at least one death. Green Party leader Natalie Bennett called on Cumbria County Council to “reconsider the call from fossil fuel divestment campaigns to take the £108 million it had invested in 2013/14 in fossil fuels into investments that tackle climate change, rather than exacerbate it.”
Data collated by Platform, Community Reinvest, 350.org and Friends of the Earth shows that across the UK, local council pension funds have invested over £14 billion in fossil fuels – more than £3,000 per public sector employee. This is more than double the total clean-up costs from December’s floods, estimated at almost £6 billion.
This is absurd. Further, these investments funnel capital out of local lives and economies across the UK. Instead of creating local jobs, this wealth is siphoned to large multinationals, who use it to drill and pollute abroad. This is neoliberalism extracting wealth from Britain’s regions- almost £500 per resident of Manchester.
The floods were not solely due to climate change. The government’s cuts to flood defences and subsidies for grouse moors for the rich exacerbated the problem, directing heavy rainfall into cities. But with December 2015 amongst the wettest and the warmest December ever, the contribution of climate change is not in doubt.
Finance directors and pension board members have for years hidden behind vague fiduciary duty requirements – claiming that this forces them to invest for short-term profit. However, legal opinion is increasingly shifting. In October, the Environment Agency Pension Fund announced it was divesting 90% of its coal holdings and 50% of oil & gas. It argued that ignoring the risks posed by climate change would be a breach of the fund’s legal duty to act in the best, long-term interests of its members.
The recent floods show that pension funds that invest in fossil fuels are not acting in either the long-term or the short-term interests of their members.