Tune into the programme on 10 February 2023 to hear Nick Hodgkinson from Fossil Free West Yorkshire explain why engagement with fossil fuel companies is not working and why the West Yorkshire Pension Fund should divest from fossil fuels.
Campaigners calling for West Yorkshire Pension Fund to divest from fossil fuels mark anniversary of vigils in Bradford, with support from Naz Shah MP
On Friday 2 December, from midday till 1pm, members of Global Justice Bradford will have been holding a vigil every Friday for a whole year, outside the West Yorkshire Pension Fund office in Bradford. Their vigil, held weekly since 3 December 2021, calls on the Pension Fund to pull out all of its investments in fossil fuels. The campaigners say they will not go away until the Fund divests from companies like Shell and BP. At 1pm, they will walk to nearby City Park to hear speeches from Naz Shah MP for Bradford West, Daniel Willis from Global Justice Now and Christine Selsby from Unite the Union.
David and Mollie Somerville, who began the vigils and have been attending since the start, said: “We are calling on the Pension Fund to stop investing in fossil fuel companies as these companies are responsible for the climate crisis. Our demands enjoy widespread support, so we’re disappointed that the Fund still refuses to do the right and sensible thing.”
Naz Shah, MP for Bradford West, said: “All five West Yorkshire local authorities have voted for the Pension Fund to divest and they are supported by 13 West Yorkshire Labour MPs and 90 councillors from across the political spectrum. It’s time for the Pension Fund to listen and take action. The International Energy Agency recently forecast that ‘peak fossil fuels’ will be reached by 2027 and then the value of fossil fuel stocks will crash. So the fossil fuel era is coming to an end – but not before it has caused the destruction of thousands of lives and millions of homes in Pakistan. Everyone, including the Pension Fund, has a duty to act urgently to stop even worse climate breakdown.”
Daniel Willis, from Global Justice Now said: “From floods in Pakistan and Nigeria to hurricanes in the Caribbean, the fossil fuel industry is wreaking havoc across the world. It is a total injustice that the people who have done the least to cause climate breakdown are suffering its effects first and worst. By continuing to invest in companies like Shell and BP, West Yorkshire Pension Fund is actively supporting companies that destroy lives, livelihoods, health and homes. Instead of investing in these companies, we should make these polluters pay for the climate chaos they are causing.”
Christine Selsby, from the Bradford Community branch of the trade union Unite, said: “After a lifetime at work, everyone deserves a decent pension in later life. But do you really want your pension savings to fund the very companies that are destroying your future and that of your children, grandchildren and indeed everyone around the world? We had temperatures over 40 degrees this summer and in recent years there’s been terrible flooding in our region. That’s the reality of climate change and there’ll be worse to come unless we do something about it now. Members of Unite Community Bradford want to see a just transition to a sustainable economy. The Pension Fund can help with this by switching its fossil investments into cheap, clean energy and services which would benefit communities, like affordable, green housing.”
Fossil fuel use will peak within five years, says the International Energy Agency’s World Energy Outlook 2022
The International Energy Agency (IEA) is the most important independent energy organisation in the world. It was set up after the global oil price shocks in the 1970s and continues to be the most authoritative voice on global energy supplies. So when it speaks, governments and the energy industry listen. This is a very brief summary of the key points from its 2022 World Energy Outlook report.
This is the headline: fossil fuel use will peak within five years and this will be a “pivotal moment” in history. For our Fossil Free West Yorkshire campaign, it means the value of investments in fossil fuel companies will drop like a stone. So it makes financial sense for West Yorkshire Pension Fund to start planning an orderly process of divesting from fossil fuel companies, like Shell and BP, and investing in renewable energy industries, which are already a growth sector.
As the IEA said last year, the overwhelming majority of companies producing renewable energy are new – they are not the big oil producers that currently dominate the energy market.
Fatih Birol, Director of the IEA, says that the “clean energy transition” is the “best way out” of the current energy crisis. The report finds “scant evidence” that investment in fossil fuels was “stifled” by net zero targets and that it is “difficult to argue” that climate policies had a role in high energy prices. Indeed, the report says that high gas and coal prices are behind 90% of the increase in global electricity prices this year.
The report forecasts that global energy demand growth will “almost entirely” be met by renewables, with global solar capacity rising 18% higher by 2030 than expected last year and wind by 14%. Three quarters of the additional energy-related investment in 2022, relative to 2021, “is being drawn towards clean energy”.
The report says: “The environmental case for clean energy needed no reinforcement, but the economic arguments in favour of cost-competitive and affordable clean technologies are now stronger – and so too is the energy security case. This alignment of economic, climate and security priorities has already started to move the dial towards a better outcome for the world’s people and for the planet.”
And it has this warning for governments and investors in fossil fuels: “Emissions coming from new [fossil fuel] projects…do not come for free in climate terms…No one should imagine that Russia’s invasion can justify a wave of new oil and gas infrastructure in a world that wants to reach net-zero emissions by 2050.”
You can read a more detailed summary of World Energy Outlook 2022 here.
Bradford Council – Act on Pakistan floods & divest from fossil fuels
“The devastating floods in Pakistan have been a wake-up call for us.
1500 people have died, 33 million people have been displaced, over a million homes have been destroyed. There is no scientific doubt that the people of Pakistan are suffering from the effects of climate change.
Bradford Council & West Yorkshire Pension Fund must act to STOP investment in the fossil fuel industry and instead support sustainable investments and protect pensions.”
A big thank you to Aleem Bashir for this powerful call to action to Bradford Council and the West Yorkshire Pension Fund.
5 West Yorkshire councils support divestment
Wakefield council motion
27.10.21 Wakefield Council resolved:
(1) Review its Investment Strategy and developing and implementing a Responsible Investment Policy which ruled out new investments in fossil fuel companies.
(2) Call on Wakefield’s Pension Fund to divest from fossil fuels by requesting its representative(s) on the Pension Fund Committee to call for the development and adoption of responsible investment policies which:
a. Immediately freeze any new investment in the top 200 publicly-traded fossil fuel companies.
b. Divest from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds within 5 years.
c. Set out an approach to quantify and address climate change risks affecting all other investments.
d. Actively seek to invest in companies that would reduce greenhouse gas emissions and minimise climate risk.
(3) Instruct the Chief Executive to write to the Leaders and Chief Executives of all other Councils that use the West Yorkshire pension Fund outlining this Council’s position and asking for their support to adopt the same policies.
Read more: http://mg.wakefield.gov.uk/documents/g14709/Printed%20minutes%20Wednesday%2027-Oct-2021%2014.00%20Council.pdf?T=1 (page 7-8)
Kirklees council motion
13.10.21 Kirklees full council meeting voted to “stop investing in companies producing fossil fuels, to move its current investments into environmentally friendly businesses, and to make these changes within the next three years”
Read more: https://kirkleestogether.co.uk/2021/10/14/kirklees-council-urges-pension-fund-against-fossil-fuel-investments/
Bradford council motion
12.10.21 At the full Council meeting, BMDC resolved
Council resolves to recommend that the WYPF:
a) Acknowledge, respond and act on the concerns, both financial and ethical, of its stakeholders over its holdings in fossil fuel energy companies.
b) Take positive steps to wind-down its holdings in fossil fuel energy assets in a manner and timescale that is consistent with:
a. its primary obligation and not risking material financial detriment to the Fund.
b. its commitment to achieving a net-zero portfolio by 2050 or sooner.
c) Implement its commitment to a net-zero portfolio, using its leverage as an investor, both individually and collectively, with the aim of achieving real economy emissions reductions.
d) Make a further commitment to significant progress towards net-zero by 2030, in recognition of the LCR Climate Coalition goals.
e) Report annually on progress of b), c) and d) above.
Read more: https://bradford.moderngov.co.uk/documents/g7533/Printed%20minutes%2012th-Oct-2021%2016.00%20Council.pdf?T=1 item no. 46, page 10
Leeds council motion
22.9.21 Leeds council voted for West Yorkshire Pension Fund (WYPF) to
(i) be explicit about acknowledging the Climate Emergency and the need to divest from fossil fuels;
(ii) actively look to divest into alternative, cleaner investments with comparable returns; and
(iii) report annually against the progress on divestment, specifically against the region’s declared net zero target.
Read more: https://democracy.leeds.gov.uk/ieDecisionDetails.aspx?ID=54501
Calderdale council motion
21.7.21 Calderdale Council took the decision to ask West Yorkshire Pension Fund (WYPF) to “disinvest their fossil fuels investments in three years, and to invest instead in alternatives (such as green energy) that are expected to offer returns over the long term.”
Read more: https://cl-assets.public-i.tv/calderdale/document/Item_12___Zero_Carbon_Pensions_and_I89da7811c4.pdf
Why the West Yorkshire Pension Fund says it will not divest from fossil fuels
An in-depth critique of their claims, by Fossil Free West Yorkshire (March 2023)
What’s this briefing about?
If you’ve written to WYPF about divestment recently, the chances are that any reply you received was written by their ESG officer. ESG stands for Environmental, Social and Governance, which is (sort of) how the fund deals with ethical investment issues. The ESG officer has made a number of claims that you really shouldn’t take at face value. Please read on to find out why.
The key benchmark: halving emissions by 2030
But first, let’s remind ourselves of the single most important figure and date for our climate: all emissions must be cut in half by 2030 to stand any chance of achieving net zero by 2050 and avoiding the worst effects of climate change. This has been the message from the world’s scientists on the IPCC for years. Let’s also remember that net zero by 2050 gives us a 50/50 chance of keeping global heating below 1.5C. The consequences of failing to do that are truly terrifying. So we must test the credibility of everything WYPF claims against this critical benchmark: 50% cut by 2030.
Claim: WYPF takes climate change seriously
“West Yorkshire Pension Fund sees climate change as an existential threat to the planet and recognises the need to act. To that end it has made a commitment to cut the carbon emissions of the fund to net zero by 2050.” This is definitely welcome but do their actions match their words? WYPF still has around £500 million invested in fossil fuels, mostly BP and Shell. “Since 2019 WYPF’s emissions have diminished by 4.2% annually and the fund aims to achieve 7% annually to reach net zero by 2050”. This is also good but to halve its carbon footprint by 2030, the fund needs to cut its emissions by 7% per year starting this year.
Claim: WYPF influences companies’ decisions and this approach is working
“WYPF firmly believes that its power to influence companies is exclusively derived from its economic interest: as fractional owners of companies, managements are its agents and the Fund has the ability to remove managers through voting if they fail to act.” The problem with this claim is that there’s zero evidence to show that the fund’s attempts to influence the investment decisions of BP and Shell has made any difference. That’s not surprising because their entire business models depend on fossil fuels. We don’t deny that ‘influencing’ could work with other, less fossil fuel dependent companies, but it doesn’t work with BP and Shell.
Here’s the evidence. No managers at BP or Shell have ever been removed by shareholders like WYPF. The most the fund could do is propose a motion to do that (which they haven’t ever done) which would almost inevitably be voted down. Despite Shell and BP’s fine words, there has been no actual reduction in their total emissions. Recently, WYPF said: “The Fund was disappointed… by BP’s recent decision to reduce its expectations for CO2 reductions, and as a shareholder, will push the company to reconsider.” That is evidently not evidence that trying to influence BP is a strategy worth continuing. It is evidence that BP takes no notice of WYPF and other shareholders’ concerns about the climate. The fund’s ‘engagement’ strategy has demonstrably failed. BP’s 2021 annual report described ‘engagement’ by investors as “useful”. Could that be because it does not exert any real pressure on them to change nor does it put their fossil fuel profits at risk?
According to all the evidence, there is absolute zero chance of BP and Shell halving their total emissions by 2030. The Transition Pathway Initiative produces helpful graphs forecasting companies’ progress to net zero by 2050. Based on their current plans. BP and Shell’s graphs show only a small reduction by 2030 – nowhere near to cutting their emissions in half. You can see the interactive plots of Carbon Performance for BP and Shell on the TPI’s website. We only have until 2030 to halve all emissions, which BP and Shell, based on these trajectories, will not do. There is simply no track record of WYPF successfully influencing BP and Shell.
Claim: BP and Shell are on target to halve their emissions by 2030
This claim could only even be suggested if you exclude emissions from all the oil and gas they sell! The WYPF’s claim refers to what are known as scope 1 and 2 emissions – ie emissions from offices, vehicles, transport, etc. The emissions caused by burning the oil and gas that BP and Shell sell are called scope 3 emissions and they are the primary cause of the climate crisis. The companies are not cutting those emissions. There aren’t even any science-based targets for the oil and gas industry to reduce its scope 3 emissions, which make up 95% of the industry’s emissions.
Claim: BP and Shell are pivoting away from fossil fuels and will be big suppliers of renewable energy in the future
“The energy companies of today will very likely be the energy companies of tomorrow.” Again, independent evidence does not back up this claim. The majority of clean energy is owned by new companies, not fossil fuel companies. The International Energy Agency’s global director for renewables said in 2021: “only 0.5%, or even less than that, of renewable capacity installed is owned or contracted by oil companies… Will they become the major investors of renewable technology? The answer is no.”
What’s even worse is that both BP and Shell continue to explore for and invest in new fossil fuel supplies. Yet we know that 40% of the world’s existing fossil fuel reserves must stay in the ground to keep global heating to 1.5C. When you’re in a hole, stop digging! That’s why the International Energy Agency said that exploring for and funding new oil and gas supplies must stop now. Their report, ‘Net Zero by 2050: a Roadmap for the Global Energy Sector’, published in May 2021, stated categorically: “There is no need for investment in new fossil fuel supply in our net zero pathway. Beyond projects already committed as of 2021, there are no new oil and gas fields approved for development in our pathway [to net zero by 2050]…”
In flat contradiction, Shell has stated it will continue to develop new ‘frontiers’ until 2025 and has made no commitment at all to stop investing in parts of the world where it already has fossil fuel reserves. Shell ranked third globally amongst international oil and gas companies for the amount of new oil and gas production approved for development in 2022 and plans to spend $1.5 billion per year on exploration until 2025. This very recent report confirms that BP intends to spend twice as much in 2023 on fossil fuels than ‘low carbon’ energy projects. It is also worth pointing out that when Shell talks about ‘low carbon’, this could include fossil fuel gas. Shell’s latest report to the SEC (the US financial markets regulator) has been challenged. Global Witness found that “just 1.5% of Shell’s capital expenditure has been used to develop genuine renewables, such as wind and solar, with much of the rest of the resources devoted to gas, which is a fossil fuel.”
BP and Shell’s investment plans are not compelling evidence of companies urgently ‘pivoting away’ from fossil fuels. This excellent analysis of Shell’s plans explain why Shell is not on track to cut its total emissions in half by 2030.
Claim: we can’t cut oil and gas too quickly or it will damage the economy
“Cutting capital expenditure to restrict oil and gas supply where demand is not adjusted would lead to higher prices that hurt economies and consumers.” This statement reveals a complete lack of understanding of the scale and ferocity of unchecked climate breakdown. The ‘hurt’ would be immeasurably greater if emissions are not halved by 2030 and the ‘economies and consumers’ hurt first and worst are the poorest in the world – people who have done least to cause climate breakdown. So ‘cutting capital expenditure to restrict oil and gas supply’ and investing vast amounts in clean energy is exactly what needs to happen, along with measures to manage the energy transition to reduce the effects of inequality. The IEA’s 2022 report, ‘World Energy Outlook’, clearly states the way out of the current energy trilemma (emissions, cost and security) is an immediate and large scale shift to renewables. It is not about continued investment in fossil fuels.
Claim: BP and Shell are ‘going green’
As explained above, the facts don’t support that claim. But if you’ve seen BP and Shell’s adverts, you’ll know that greenwashing is high on oil and gas companies’ agenda these days. This article makes for interesting reading: The great greenwashing scam: PR firms face reckoning after spinning for big oil. A recent investigation by the US House of Representatives lays bare the sector’s deliberate greenwashing. The internal documents obtained from oil and gas companies show in detail how they present a public message about ‘going green’ while privately admitting that this is misleading. You can read more here. The similarity with ‘big tobacco’ is striking – cover up, deny, lie, delay.
WYPF has also stated: “BP and Shell are contributing to the clean energy transition via charging points”. While a good thing, this contribution is massively outweighed by their continued commitment to exploring for, investing in, extracting and selling fossil fuels. In a nutshell, neither company is ‘going green’ anything like fast enough to cut their emissions in half by 2030.
Claim: BP and Shell have pledged to go net zero by 2050
WYPF’s claims about BP and Shell are almost entirely based on the companies’ own words. Independent analysis tells a very different story. On 7 October 2020, the Financial Times reported on research by the London School of Economics and investors that manage $21tn in funds. They found: “No major oil, gas or coal company is on track to align their business with the Paris climate goal of limiting the global temperature rise to well below 2°C by 2050 [let alone 1.5C] despite net-zero emissions pledges”.
Research by Tokyo University, published in 2021, “revealed no evidence to suggest any [big oil company] has entered the renewables market at a scale that would indicate a shift away from fossil fuels.” While none of the companies in the research directly released data on their investments in clean energy, information they provided to the Carbon Disclosure Project indicates low average levels from 2010 to 2020:
- 2.3% of BP’s capital expenditure – BP’s global renewable energy capacity is the equivalent of just two large gas-fired power plants
- 1.33% of Shell’s capital expenditure – this includes large investments in carbon capture and storage rather than renewable energy production
Anticipating accusations that the research was not up to date, the authors explained: “We included documents that were published during 2021… and we didn’t find any evidence of any new actions that would change any of our findings.”
Claim: WYPF takes note of Transition Pathway Initiative (TPI) ratings which say BP and Shell are doing well at moving away from fossil fuels
“BP and Shell scored well in the TPI’s latest assessment, BP gaining the highest score 4, Shell the second also at 4.” The TPI is a respectable project. However to get a TPI level 4 rating, companies only need to have made an assessment, rather than actually having taken any action to cut their emissions. As reported in this article that analyses their methodology: “TPI researcher Nikolaus Hastreiter states this very clearly: the feasibility of the climate ambitions is not something we’re looking at the moment.” So it’s a company’s pledges, not actions, that lead to high ratings. Indeed, the TPI measures do not even include a target to halve emissions by 2030.
The same article concludes: “This is why TPI’s conclusion is wrong: a company planning, one day, to reach a low level of emissions does not mean it is aligned with a global warming limit of 1.5°C. In fact, each year in which a company’s emissions are above the pathway target further compromises our planet’s ability to recover.” If WYPF really wants to support companies with credible climate goals, there are more relevant questions to ask. Does the company plan to exit fossil fuels and by when? Are they still investing in new oil and gas fields, developing further Liquid Natural Gas infrastructure, or increasing the share of unconventional oil and gas in their energy mix? The answers to these questions provide more concrete indicators of whether a company is following a credible transition plan.
Claim: we need oil and gas as a ‘bridge’ to a new world of clean energy
There is some truth in this. There isn’t enough renewable energy or infrastructure to stop using fossil fuels tomorrow. But this is not what is being suggested by divestment campaigners, who are calling for a cessation of new oil, gas and coal and rapid escalation of renewable energy. This argument is often used by the fossil fuel industry tends to be about delaying climate action: delay has replaced denial. The longer we delay switching away from fossil fuels, the worse the climate crisis gets – but delay does prolong BP and Shell’s profits.
Claim: the transition from fossil fuels to clean energy can’t happen overnight
We agree. We’re calling for a 2-3 year planned transition by WYPF out of all fossil fuel stocks, starting with the biggest polluters (BP and Shell) to speed up the energy transition. The United Nations General Secretary Antonio Guterres recently warned: “We must triple the speed of the shift to renewable energy if we are to limit global warming” and the latest IPCC report reiterated: “limiting warming requires shifting energy investments away from fossil fuels and towards low carbon technologies”. These are precisely the actions that we’re calling on WYPF to take. BP and Shell are simply not tripling the speed of their transition nor shifting investment in renewables anything like fast enough to cut their total emissions in half by 2030.
Claim: fossil free investment portfolios don’t pay as well as fossil fuel portfolios
Yes they do. For example, global investment companies like FTSE and MSCI have fossil free indices which have consistently equalled or outperformed their fossil fuel inclusive equivalents for over 10 years. If you’ve pointed this out to WYPF, you may have been told that this 10 year period is not a reliable measure and that fossil fuel values have risen considerably in the past year. So… the fund’s claim is that a one year period, in the exceptional circumstances of Putin’s war in Ukraine, is a more reliable indicator than a 10 year period of comparatively stable oil and gas prices. We don’t believe that is a credible or financially prudent position.
We are calling for divestment, in a financially sensible way. This does not mean simply pulling out of fossil fuels tomorrow, with no replacement investments. It means managing a change to the fund’s overall portfolio, over 2-3 years, moving investments into a broad range of assets that both pay reliable dividends now (to pay our pensions) and do not fund the fossil fuels that are destroying everyone’s future.
Claim: WYPF invests nearly £1 billion in clean energy and technology
This is very welcome but the fund still invests half a billion in fossil fuels. We agree with WYPF that “Decarbonisation will create new industries and investment opportunities.” However, as explained above, these investment opportunities are not in BP and Shell because the majority of clean energy is owned by new companies.
Claim: divestment would simply mean other, less scrupulous investors buy WYPF’s shares in BP and Shell
“The next investor may prove less diligent than WYPF in scrutinising management behaviour”. The argument ‘if we don’t do it, someone else will’ is the same defence used by drug lords and people traffickers. It is a morally unacceptable position.
Furthermore, as explained earlier, WYPF’s ‘diligent’ attempts to influence BP and Shell have had no effect on the total quantity of their emissions, have not stopped them investing in new oil and gas reserves and have had negligible impact on their business models. By contrast, divestment would send a clear message to BP and Shell (and the rest of the market) that their actions are insufficient. It would also save WYPF from the risk of major losses when the ‘carbon bubble’ bursts. That is, when the world’s economies reach a tipping point, with renewable energy replacing fossil fuels, leaving oil and gas investments as ‘stranded assets’ when their value will crash. A decision to divest would be even more effective if taken along with Merseyside and Greater Manchester pension funds, the other members of the Northern Pool of pension funds, to which WYPF belongs. But let’s start with WYPF!
Claim: divestment doesn’t work
Those opposed to divestment often argue that “there is no evidence that divestment has led to any reduction in emissions in the real world”? Actually, there is. Evidenced by this long report by the University of Augsburg (2022), with a helpful five minute overview video. While WYPF might think divestment is ineffective, Shell disagrees. Its 2018 annual report specifically identifies fossil fuel divestment campaigns as a threat: “Some groups are pressuring certain investors to divest their investments in fossil fuel companies. If this were to continue, it could have a material adverse effect on the price of our securities and our ability to access equity capital markets.” If we ever needed motivation to keep up the pressure, that’s it! Other local government pension funds in the UK (eg Cardiff, Lambeth) and pension funds across the world (eg New York, Dutch fund PFZW) are divesting. So we know it can be done.
Fossil Free West Yorkshire, March 2023
WYPF’s Annual Carbon Footprint
Following correspondence with Robert Hulme, West Yorkshire Pension Fund’s Responsible Investment Engagement Manager we received the following statement in September 2022:
“We have carbon data for 72% of our total assets, these are the vast majority of our listed equities split geographically plus our bond holdings split by type, either corporate or sovereign. We have been unable to source good quality data for our alternative assets these are our property, private equity, infrastructure and hedge fund investments but are looking to add these in coming years.
The total emission number for those assets we have been able to measure is 2,009,191 Tonnes of CO2e, this is 9% lower than the emissions of relevant benchmark. (the sovereign data isn’t included in the table as the methodology used to calculate emissions is different.)
We are currently finishing our carbon exercise of 2022, and are also looking to back date the exercise for years ’19 & ’20. ’19 is the base year for our net zero 2050 commitment. These will be published hopefully before the end of the year.”
Email correspondence, Monday, 26 September 2022
WYPF’s Carbon Footprint is more than 2 million tonnes of CO2e annually
To put this in context, , as a region, West Yorkshire currently emits 11.1 million tonnes of carbon dioxide equivalent per year.
Reference: West Yorkshire Carbon Emissions Pathways Technical Report
2 million tonnes of CO2e is the equivalent of 400,000+ cars (at 5 tonnes/car pa) ie one third of 1.2 million cars on West Yorkshire roads (assuming 1 car per household).
West Yorkshire Pension Fund 2022 AGM
WYPF replies to members’ questions and our responses
Several questions were asked at WYPF’s AGM in October about the Fund’s approach to fossil fuels and renewable energy investments. Below you can read the questions, the Fund’s replies and Fossil Free West Yorkshire’s responses to those replies.
Q1. We have had a number questions regarding our approach to fossil fuels and divestment. Because of the similarity of these questions we’ve covered them in one answer
WYPF replied: “The fund has developed a responsible investment policy and sees climate change as an existential threat to the planet and recognises the need to act.
To that end we have made a commitment to cut the carbon emissions of the fund to net zero by 2050. We are in the process of implementing this strategy and have published a Task Force on Climate-related Financial Disclosures (TCFD) explaining how we intend to identify, measure and mitigate climate change risk. There is much more information on our website on this topic.”
Fossil Free West Yorkshire says: it’s good that the Fund has recognised the existential nature of the threat posed by the climate crisis. It’s also good that they have a target of reaching net zero by 2050. But the science tells us that we must cut all emissions in half by 2030 to retain a realistic chance of keeping global temperature rise to 1.5C. That requires immediate action by all sectors – including pension schemes – to radically reduce their contribution to greenhouse gas emissions. Continuing to invest in companies that are the primary cause of those emissions is completely incompatible with halving emissions by 2030 and is self defeating in relation to the Fund’s stated intention of tackling the climate crisis.
Q2. Given the events of the past year, does the fund regret our continuing support of fossil fuel companies and the indirect support to Putin in Ukraine? Does the government’s cap on UK renewable energy companies finally persuade our fund leaders that renewables are the profit makers of the future?
WYPF replied: “As a consequence of higher fuel prices our fossil fuel investments have had a strong year: BP has risen 36% vs. a 10% fall in the All-share index. Conversely some of our new energy stocks hydrogen manufacturer ITM is down 75%, battery maker IES down 70%. The share prices of fossil fuel companies are often uncorrelated to the overall direction of the market but again I would reiterate that the existing energy companies will be the energy companies of the future as they recycle cash flows into new energy and there have been a number of investments announced from Shell & BP in support of this argument.”
Fossil Free West Yorkshire says: as well as not answering the question regarding the war in Ukraine, this response also gives a very short term perspective. To be clear, we’re not asking the Fund to divest tomorrow. We say it’s inevitable that fossil fuel prices will peak, then fall rapidly, as the world shifts to renewable energy sources. The International Energy Agency (IEA) forecast in November 2022 that ‘peak fossil fuels’ will occur around 2027 but no one can be absolutely certain of the date. So we’re calling on the Fund to begin planning now for a 2-3 year process of divestment, as a sensible precautionary approach to its long term investments and to stop funding the companies that cause climate breakdown.
There is simply no independent evidence to support the claim that companies like BP and Shell will be tomorrow’s renewable energy suppliers. We have asked the Fund several times for any independent evidence and all they provide are ‘pledges’ and quotes from BP and Shell. By contrast, research by the University of Tokyo in 2022 “revealed no evidence to suggest any [big oil company] has entered the renewables market at a scale that would indicate a shift away from fossil fuels.” Separate analysis by the IEA indicates that investment in clean energy by oil and gas companies was about 1% of their capital expenditure in 2020. The IEA’s global director for renewables said in 2021: “only 0.5%, or even less than that, of renewable capacity installed is owned or contracted by oil companies… Will they become the major investors of renewable technology? The answer is no.” Who do you believe: BP and Shell or the independent International Energy Agency?
Q3. There were a number of questions asking about the extent to which WYPF invests in green or sustainable industries.
WYPF replied: “The fund has a growing amount invested in “Climate Solutions”. These are equity or debt investments in companies which derive 25% or more of their revenues invested in the following areas:
- The generation of renewable electricity (wind, hydro, solar, geothermal, bio)
- Emissions removal technologies (e.g. Carbon Capture & Storage)
- Energy infrastructure including Energy Storage, Transmission & Distribution
- Investments in other technologies or services demonstrating a clear
- decarbonising benefit.
As of March total investments in these areas was £910 million.”
Fossil Free West Yorkshire says: it’s good that the Fund is increasing its investments in decarbonising industries but it needs to go further, faster. Remember: we must halve all emissions by 2030 to retain a chance of preventing the worst effects of climate breakdown – every fraction of a degree of temperature rise matters. We also have concerns about exactly what the Fund defines as renewable electricity. For example, the Drax power station near Selby receives millions of pounds in public subsidies for its biomass burners. Whether biomass is genuinely renewable energy is hotly contested by scientists and is a particular concern at Drax. There is ample documentary evidence that the pellets burned in Drax come from clear cutting ancient, biodiverse forests in the USA, Canada and the Baltic. We have asked the Fund for more information about its renewable energy investments but have had no reply.
Q4. The International Energy Agency has stated that in order to reach net zero carbon emissions by 2050, there can be no new oil or gas exploration beyond projects started in 2021. Can the Fund provide any evidence that its investments in Shell and BP are compatible with the IEA’s statement?
WYPF replied: “It’s important to understand what the IEA does; it’s an autonomous part of the OECD with a remit to ensure global access to energy including a desire to reduce oil dependence and develop alternatives – it’s useful to think of it as the opposite of OPEC that represents oil producers. Both Shell and BP have 2050 net zero commitments and have started pivoting toward a decarbonised future. For example, Shell has started to wind down its exploration activity and doesn’t anticipate any new frontier exploration entries after 2025, BP has a commitment not to explore in any new geographies. While this date falls short of the IEA target there is no standard methodology and both companies believe that they are aligned with the 1.5°C goal of the Paris Agreement. Both are significantly more advanced than other global companies.”
Fossil Free West Yorkshire says: describing the IEA as in any way comparable to OPEC is deeply misleading. OPEC is the global ‘trade body’ for countries that produce oil and gas. The IEA is an independent intergovernmental organisation that provides policy recommendations, analysis and data on the entire global energy sector. The 31 member countries and 11 association countries of the IEA represent 75% of global energy demand. The IEA’s annual World Energy Outlook report is the most authoritative publication in the global energy sector. So what they say matters.
And what they said in their 2021 report: Net Zero by 2050: a Roadmap for the Global Energy Sector, could not have been clearer: “There is no need for investment in new fossil fuel supply in our net zero pathway. Beyond projects already committed as of 2021, there are no new oil and gas fields approved for development in our pathway [to net zero]…” But the Fund itself admits that Shell will continue to explore for new fossil fuel sources up to 2025 – remember its interest in the North Sea Cambo oil field? BP has given no date at all when they will stop looking for new fossil fuels, just a vague ‘pledge’ to stop in the future. The Fund says that “both companies believe that they are aligned with the 1.5°C goal of the Paris Agreement” but the evidence says something quite different.
And yet the Fund still claims that by ‘engaging’ with fossil fuel companies, it can persuade them to kick their carbon addiction. There is simply no independent evidence to believe that claim. However, there is independent evidence that divestment works. Research in 2021 by the University of Augsburg found that “divested firms experiencing a stock price decline [due to divestment] subsequently reduce their carbon emissions compared to non-divested firms.” This short video explains the research.
Finally, the Fund’s claim that BP and Shell “are significantly more advanced than other global companies” can only be true if you ignore all the companies that produce renewable energy as their primary business! We say the Fund should invest in this future growth sector – for the good of our pension savings and to help stop irreversible climate breakdown.
Campaigners expose climate hypocrisy at local government pension fund conference in Leeds
Activists from Fossil Free West Yorkshire and Divest UK, who are calling for local government pension funds to pull out of fossil fuel investments, picketed a national conference in Leeds on Friday 9 September 2022. The LGC Investment & Pensions Summit brings together local government pension fund managers from across the country. Protesters highlighted the fact that one of the main conference sponsors, Federated Hermes, funds an American group that lobbies in favour of fossil fuels.
Robert Noyes, from Divest UK, said: “Federated Hermes are using this conference to market themselves as ‘climate champions’ who can advise UK pension funds about ‘responsible investment’. The truth is very different. A recent investigation by the New York Times has found that Federated Hermes is a ‘gold sponsor’ of the anti-climate action, pro-fossil fuel lobbying group, the State Financial Officers Foundation (SFOF) in the USA. Federated Hermes gives SFOF money to support the fossil fuel industry that is killing our climate. They are not fit to advise our local government funds about ‘responsible investment’.”
The New York Times report exposed close links between Federated Hermes and SFOF. David Barmes, senior economist at campaign group Positive Money, said: “Instead of recognising the need for climate financial regulation to protect financial stability, achieve a green transition and stabilise inflation, SFOF sponsors are supporting climate denial and delay.”
Ali Stopher, from the Fossil Free West Yorkshire campaign, added: “We want to make sure that pension fund managers at the conference know about the total hypocrisy of Federated Hermes. They are only interested in their own profits, even if that means actively supporting a group that lobbies against climate action. It’s also disappointing that the conference has just one climate themed session. Fossil fuel investments are not only bad for our climate but also high risk for our pensions.”
More about SFOF: a recent investigation by Documented and The New York Times found that SFOF has successfully campaigned for the divestment of millions of dollars of state funds from investment managers the SFOF claims are too “woke”. It has also been pushing Republican Party state treasurers to promote oil and gas interests. The resources section of SFOF’s website contains links to climate science-denying political groups including the American Legislative Exchange Council and the Heritage Foundation.
More about Federated Hermes funding SFOF: this article in Portfolio Adviser gives more background. It includes this quote from Chris Welsford, managing director at sustainability focused Ayres Punchard Investment Management: “There is no good argument to defend any financial institution that supports SFOF, but we should not be surprised, because they want to be all things to all people and ultimately greed trumps principle in today’s financial system.”
More about Divest UK and Fossil Free West Yorkshire: Divest UK supports a national network of groups campaigning for institutions and pension funds to cut their political, social and financial ties to the fossil fuel industry. UK Divest is a collaboration between Friends of the Earth, Friends of the Earth Scotland and Platform. Fossil Free West Yorkshire campaigns to get the West Yorkshire Pension Fund to divest from all of its fossil fuel stocks and re-invest in environmentally and socially useful stocks.
40C climate emergency challenge to West Yorkshire councillors
Yesterday, as councillors gathered in West Yorkshire Pension Fund’s office Aldermanbury House, for a meeting of the Investment Advisory Panel, climate activists stood outside with a banner saying ’40 degrees’ and tried to engage with the councillors as they entered the building. Campaigners are angry at the failure of West Yorkshire Pension Fund, which is overseen by Bradford Council, to pull all of its investments out of climate polluting fossil fuel companies, like Shell and BP.
Jane Thewlis, spokesperson for the campaign group Fossil Free West Yorkshire, and WYPF pension member, said: “We’re sick and tired of the excuses that West Yorkshire Pension Fund gives for its failure to take meaningful action to tackle the climate crisis. After last week’s heatwave and extreme temperatures it is clearer than ever that pensions and our future is at risk from the climate crisis, for which the fossil fuel industry is largely responsible. Everyone, including global organisations like the United Nations and the International Energy Agency, says there’s an urgent need to make massive cuts in fossil fuel investment to prevent climate catastrophe. But our Pension Fund still has hundreds of millions of pounds invested in two of the world’s biggest climate polluters – Shell and BP.”
She added: “We’ve tried to talk with Cllr Andrew Thornton, chair of the Pension Fund, to explain why his approach to fossil fuel investments is wrong. But he won’t reply to our emails. As Antonio Guterres, Secretary General of the United Nations, said in April: ‘Climate activists are sometimes depicted as dangerous radicals. But the truly dangerous radicals are those who are increasing the production of fossil fuels… Investing in new fossil fuels infrastructure is moral and economic madness’.”
Cllr Joe Wheatley, Labour councillor for Bingley, said: “This summer there’s been an extreme heat wave in Pakistan and India with temperatures reaching 51C – it’s been going on for months. People are losing their crops, their animals and there are serious water shortages. People are dying. This is what climate change means in practice – extreme weather conditions that make it impossible for life to continue as before. We had 40C in the UK last week. We have to act while there’s still time to stop the worst from happening.”
Ann West also from Bradford, joined the protest. She gets her pension from the WYPF and she explained: “I’m here today because I’m no longer prepared to be fobbed off by my Pension Fund’s excuses for inaction. Enough is enough – they must begin divesting from all fossil fuels this year. We all depend on the same climate and we all share responsibility for protecting our planet. I want my grandchildren to live in a safe and peaceful world but climate change is making that impossible.”
After the meeting it was reported that the Panel was increasingly acknowledging that fossil fuel divestment was inevitable over the longer term with pressure growing from the five local authorities in West Yorkshire and recognition that more work needs to be done on how to divest.
Jane Thewlis from Fossil Free West Yorkshire said: “Fossil fuels are burning our future and not a safe investment. We will not give up until our elected representatives see fit to protect our future. “