U.K. guide to pension fund divestment includes a role for unions

By Elizabeth Perry - Work and Climate Change Report, March 18, 2021

Chasing Carbon Unicorns: The Deception of Carbon Markets and

Divesting to protect our pensions and the planet: An analysis of local government investments in coal, oil and gas was released in February by Platform, Friends of the Earth Scotland and Friends of the Earth England Wales and Northern Ireland.

The report details the extent of fossil fuel investment by local governments in the U.K., and their progress in divestment. However, of broader interest, it summarizes the financial status of the declining fossil fuel industry, explains the process which lead to stranded assets, and describes the financial dangers for all pension funds in quite understandable terms: “pension funds exposed to the fossil fuel system in the coming decade will face a rollercoaster ride of disruption, write-downs, financial instability and share price deratings as markets adjust.” In an explanation very relevant to Canadians, whose own Canadian Pension Plan Investment Board still clings to the “staying invested and ‘engaging’” approach – the report uses the example of investing in Blockbuster videos vs. Netflix, to debunk the “engagement” approach: “The argument for ‘engagement’ tends to be one made by asset owners who employ investment managers who won’t or can’t accept that there is a technology-driven transition occurring. …. this approach of ‘we’ll decarbonise when markets decide to decarbonise’ is clearly not a risk management strategy. It is a ‘do nothing, and hope a few meetings will help’ strategy.”

Divesting to protect our pensions and the planet offers practical steps for local councillors, community members, and labour unionists. For unions, it points to the leadership of the Trades Union Congress (TUC), which passed a climate action motion in 2017 which included support for divestment, based on a motion by their constituent unions representing food workers, communication workers, fire brigades, train drivers, and other transport workers. Unison, the primary union representing U.K. government workers, also passed a strong divestment motion in 2017 – meaningful because in the U.K., union members in government workplaces are usually entitled to some form of representation on their pension fund committee and board. The report urges union members to become knowledgeable about financial issues and to speak up in committee meetings – advocating for divestment and re-investment in lower-carbon, socially just funds which benefit their local communities and economies, especially after Covid. The report cites inspiring examples, such as investment in wind farms by Manchester and London Councils, the U.K.’s first community-owned solar power cooperative by Lancashire County Council, and social housing in the Forth Valley and in London Councils.

An earlier guide for unions was Our Pensions, Our Communities, Our Planet: How to reinvest our pensions for our good? published by the Trade Union Group within Campaign against Climate Change. The 6-page, action-oriented fact sheet lacks all the up-to-date statistical detail in Divesting to protect our pensions and the planet but makes many of the same arguments for divestment, and includes links to U.K. resources, as well as a model motion for local unions.

Disclaimer: The views expressed here are not the official position of the IWW (or even the IWW’s EUC) and do not necessarily represent the views of anyone but the author.