Climate change is here. With just over one degree of average global warming above pre-industrial levels we can already see the consequences including increased storms, droughts, heat-waves, polar and mountain ice loss and sea level rise. Atmospheric CO2 levels are now at a level higher than that experienced by any person ever. People worldwide are losing lives and livelihoods already.
The 2015 Lancet Commission on Health and Climate Change concluded that, “climate change threatens to undermine the last half century of gains in development and global health”. They noted that,
“The direct effects of climate change include increased heat stress, floods, drought, and increased frequency of intense storms, with the indirect threatening population health through adverse changes in air pollution, the spread of disease vectors, food insecurity and under-nutrition, displacement, and mental ill health.”
We know that burning fossil fuels is the major contributor to CO2 pollution and global warming. For even a miserable 50/50 chance of avoiding 2 degrees of warming 80% of known fossil fuel reserves have to remain unburnt. This represents a “carbon bubble” of stranded assets.
Yet the fossil fuel companies continue to seek new reserves and to exploit the existing ones. Many are also serial human rights abusers and climate change denial conspirators.
Council pension funds collectively hold some £295 billion of assets invested mainly in stocks and shares. This provides returns from which pensions are paid. These investments include significant exposure to fossil fuels: £16.1B or 5.5% of their assets. There are also significant investments held by universities and health organisations such as the British Medical Association and the British Psychological Society.
One the one hand, by continuing to plough funding into the fossil fuel industry, we remain locked into a fossil fuel future. On the other hand, if action is taken to prevent the exploitation of unburnable fossil fuels, then institutions are sitting on stranded assets (as the Bank of England has warned). In the case of pension funds, this means that the future of pensioners, future pensioners, their families and neighbours is threatened, as well as that for all citizens globally. Moreover, taking a financial hit on these assets will mean that to pay pensions, already stretched councils would have to dip into their budgets.
Local government these days has public health responsibilities. It is this that has led to some funds divesting from tobacco (but not all – Hackney is increasing its tobacco investments). The reputational and liability risks are arguably there with fossil fuel investments too: already oil majors are facing collective lawsuits for their negligence and conspiracy. Discharging their “fiduciary duty” is consistent with taking climate and other environmental and social risks into account, thus going beyond a narrow focus on financial returns: The Pensions Regulator has confirmed this understanding following consultations by the Law Commission and the DCLG.
Some pension funds in the local government scheme are showing the way with commitments to total or partial divestment: the Environment Agency Pension Fund, Haringey, Hackney, Waltham Forest, Southwark, and South Yorkshire. Others are dragging their feet with as much as 10% of their holdings in fossil fuels. Think what good those billions could do in the local and environmentally friendly economy, positively improving the health and well-being of the population.
Last weekend at its AGM, the SHA’s sister socialist society, SERA – the Labour Environment Campaign, also agreed to support these actions and work with the labour movement to promote fossil fuel divestment as a practical approach to reducing both environmental and financial risk.
SHA members can support the fossil fuel divestment campaign in a number of ways.
Teaser photo credit: By Cafe cafes Cafe cafes – Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=46716532