Fossil fuel investment by London Borough of Islington Pension Fund

London Borough of Islington Pension Fund has invested almost £20 million in fossil fuel companies, a new investigation has found.

By Will Grimond, Data Reporter

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Photo: RADAR

***This article was amended on 7th November 2023 to include a statement from the chair of the Islington Pension committee***

London Borough of Islington Pension Fund has invested almost £20 million in fossil fuel companies, a new investigation has found.

Research from environmental campaign groups has revealed billions are being invested in the oil and gas industries by local government pension funds across the UK.

These are normally administered by a local authority, but other public bodies can also sign up to them.

The investigation, by Friends of the Earth and Platform London, shows London Borough of Islington Pension Fund had around £19.2 million invested in fossil fuel companies in the 2021-22 financial year.

The true figure may be higher, as the researchers were only able to screen 64% of investments by the pension scheme.

In total, the pension fund is worth £1.8 billion.

Jamie Peters, climate coordinator at Friends of the Earth, said: “From insulating heat-leaking homes to facilitating mass public transport, councils are key to effective climate action, but this is undermined if local authority pension funds continue to fund fossil fuels.

“It’s time to ditch financially risky holdings in gas, coal and oil, and invest in accelerating the transformation to a carbon-free future.”

The investigation covered 75% of assets managed by the Local Government Pension Scheme in the 2021-22 financial year.

Across the UK, it found at least £12.2 billion invested in fossil fuels – £10.4 billion in England, £1.4 billion in Scotland, £227 million in Wales and £28 million in Northern Ireland.

Rob Noyes, divestment campaigner and researcher at Platform London, said: “Investments in dirty fossil fuels turn public sector savings into fossil fuel playthings, pumping billions of pounds through the pensions pipeline into climate-wrecking fossil fuels.”

Jo Donnelly, board secretary to the Local Government Pension Scheme Advisory Board, said: “Investment decisions relating to LGPS funds are made at a local level by a pensions committee made up of elected councillors, they consider their fiduciary duty to members and taxpayers when making decisions, along with other relevant considerations.

“All investment decisions are a matter for individual funds to reflect on, and balancing considerations around risk to investment portfolios caused by climate-related factors, as well as the other elements of ESG, are part of being responsible investors and asset owners. Many funds have set net-zero targets or goals and this is something that funds should review at regular intervals, allowing them to prepare for and navigate the transition in as smooth a fashion as possible.”

“Naturally funds will have different approaches to holding fossil fuel-related investments, and they may wish to consider looking to their pools to assist them to assess and achieve their net-zero targets,” she added.

Paul Convery, Labour Councillor for Caledonian Ward and chair of the Islington Pension committee responded to this article with this statement:

Islington Council no longer holds any shares in fossil fuel companies. The research quoted says that 1.7% of the pension fund was invested in fossil fuel companies in the 2021/22 financial year. In Summer 2002, we sold the remaining equity holdings in listed energy companies that are oil, gas or coal extractors. We did so by liquidating a FTSE 250 based Index of UK companies and transferred the resulting £164m into a global “Paris Aligned” indexed fund.

We are also reducing the wider “carbon footprint” of the Fund and started doing so in 2017. In the last two years alone, carbon emissions from the pension fund’s companies have reduced by 40%. That’s 25,000 tonnes less CO2 emitted every year – equivalent to 62 million vehicle miles.

In 2022, we set a fresh target to reduce by 50% the entire Fund’s carbon footprint by 2026. Within the next 3 years, half the Fund’s investments will be net carbon neutral. Our goal is to be 100% net neutral by 2030.

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