East Sussex Council Staff Pensions' Policy Brings New Criticism From Climate Change Activists

Environmental campaigners have called on the East Sussex Pension Fund to abandon its policy of “engagement” with fossil fuel companies and commit to disinvestment.

The call comes after a meeting of East Sussex County Council on Tuesday (December 1), where residents associated with the campaign group Divest East Sussex flooded the authority with public questions.  

In all, a total of 135 people had submitted questions associated with the campaign, many calling on pension committee chair Cllr Gerard Fox to give examples of fossil fuel companies committed to reducing emissions in a way which would limit global warming to 1.5°c.

In a lengthy written response to these questions, Cllr Fox said:

“A large number of the questions ask whether as Chair of the Pension Committee I can give a single example of an oil and gas major that is currently aligned with a 1.5°c pathway. 

“The research shows that there are none, despite some bold moves by European companies. 

“According to the Transition Pathway Initiative five oil and gas majors are on track to align with the Paris emissions pledges, three of which are getting closer to a 2°c climate pathway by 2050 but additional measures are required. 

“Most economies, including the United Kingdom, are not yet on track to align with commitments made under the Paris Agreement and much policy detail has yet to follow.

“It goes without saying therefore that a very substantial proportion of major companies and sectors are also not operationally aligned with Paris ambitions because policy does not fully support that outcome.”

Cllr Fox’s response covered a number of other areas as well, arguing that the pension fund has worked to move more of its investments into index funds which either exclude fossil fuel companies or promote climate sustainability.

The fund is also a member of several investment pressure groups, he added.

But Cllr Fox also argues the fund’s primary purpose is to provide pensions to the fund’s beneficiaries and that it is necessary to balance its sustainability goals with its fiduciary responsibility.

He said:

“As a responsible investor it must reconcile the unfolding energy transition with its need for income to pay those pensions and it has an overriding interest in maximising the investable set of companies in its portfolio. 

“As a consequence it pursues a policy of active engagement around the Energy Transition primarily via its membership of the Institutional Investor Group on Climate Change (IIGCC) & Climate Action 100+ which seeks to pressure and assist companies … in aligning their long run operations with net zero ambitions and decarbonisation pathways.”

He added:

“The committee regularly debates the merits of Engagement vs. Divestment in relation to fossil fuels. 

“It does not currently recognise blanket divestment from entire sectors as an effective or fiduciary approach.”

But climate campaigners argue the fact no fossil fuel company is on track to meet a 1.5°C target shows an engagement approach has proven to be ineffective and should be abandoned.

A spokesman for Divest East Sussex said:

“The window for limiting global warming to 1.5°C – and thereby avoiding the most calamitous impacts of climate change – is rapidly closing. 

“Moreover, doing this will require dramatic cuts in emissions from oil and gas over the next ten years.  

“Yet – as the council has finally conceded today – despite many years of ‘engagement’ not a single oil and gas major is currently anywhere near aligning with this goal.

“For East Sussex County Council to continue pursuing a failed policy of ‘engagement’ with these companies after itself declaring a ‘climate emergency’ is pure hypocrisy. 

“The time is long overdue for ESCC to follow the lead of other local councils, like Southwark and Waltham Forest, and commit to divesting from fossil fuels.”