Fossil fuel battle heats up at the pension fund for British MPs
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British politicians are engaged in a heated battle with their own pension scheme over its refusal to disclose how much of the £600m fund is invested in potentially risky fossil fuel companies.
Two senior British politicians have accused the trustees overseeing their pension scheme of behaving in an opaque and obstructive manner, after calls for greater transparency of the fund’s exposure to climate change were rejected.
Caroline Lucas, co-leader of the UK’s Green party, said the pension fund’s refusal to disclose how exposed the scheme is to fossil-fuel intensive industries, such as oil and gas, demonstrated “a complete disregard to the financial risks of carbon exposure”.
Ms Lucas launched a campaign last year to persuade the trustees of the fund, which provides pensions for retired MPs and ministers, to divest from fossil fuel companies.
The campaign, which won the support of 32 MPs across five political parties, including senior Labour politicians David Lammy and Barry Gardiner, also called for the Parliamentary Contributory Pension Fund to quantify its exposure to fossil fuel companies and to share this information with members.
Last month Ms Lucas received a letter from the chairman of the board of trustees, Brian Donohoe, stating it was no longer “possible for the trustees to engage in further prolonged discussion” with the MPs on the scheme’s investment approach.
Ms Lucas said: “The attitude of the pension fund trustees is extremely short-sighted. Not only have they refused to properly engage with their members over simple transparency questions, but they are now dismissing our calls for action to protect investments from the financial risks associated with climate change.
“Parliamentarians should be leading the way on tackling climate change, yet our pension fund is utterly untransparent.”
Investors controlling trillions of dollars of assets have already committed to cut back or sell out of holdings in fossil fuel companies, including Norway’s state pension fund, Axa, the French insurance group, and Nordea Asset Management, the largest Nordic fund manager.
The trustees of the MPs’ scheme declined to comment.
Mr Gardiner, the shadow secretary of state for international trade, added: “Investments in fossil fuels and high-carbon assets are associated with high financial risk. MPs have worked across party lines to try to find out where our pension pot is invested, and the risks these investments are exposed to from climate change, but we still haven’t got answers.
“More rigorous action is essential as the global regulatory framework moves towards a low-carbon future. It is deeply concerning that the trustees are refusing to engage further on these pressing issues, and I urge them to think again and answer our legitimate questions.”
Unlike most large corporate and public pension schemes, the MPs’ pension fund does not disclose its biggest equity or bond holdings, or its sectoral exposure. This means its 1,800 members have no idea how much of the scheme is invested in oil and gas companies, or other controversial industries such as weapons manufacturers or tobacco.
By contrast, the Environment Agency Pension Fund, which oversees £2.7bn of assets on behalf of 23,000 members, lists its 20 largest equity holdings and its sectoral exposure within its annual report.
MPs from different political parties have approached officials at the Environment Agency Pension Fund, which has committed to reducing its exposure to coal companies by 90 per cent by 2020, for help in persuading the trustees of the PCPF to adopt a similar approach.
Catherine Howarth, chief executive of Share Action, the non-profit group that campaigns for responsible investment, said the politicians’ difficulty in obtaining information about their pension fund’s investments highlighted the need for stronger legal rights for UK pension savers.
She said: “Savers across the UK, especially younger savers, are increasingly curious about what happens to their pension savings, but frequently frustrated when they try to get answers. We urge the [Department for Work and Pensions] to act swiftly to develop and communicate a 21st-century framework of savers’ rights.”