Petitions and Public Address
Decision:
The Committee heard an address from Peter Wallis, an employee of Oxfordshire County Council, member of the LGPS and a supporter of Fossil Free Oxfordshire, in relation to a number of items on the Agenda, in particular Agenda Item 10 - Review of the Asset Allocation.
Minutes:
The Committee heard an address from Peter Wallis, an employee of Oxfordshire County Council, member of the LGPS and a supporter of Fossil Free Oxfordshire, in relation to a number of items on the Agenda, in particular Agenda Item 10 - Review of the Asset Allocation.
Mr Wallis urged the Committee to adopt the low carbon options of the Brunel Pension Partnership and to take its investments out of Shell, asking how the Pension Fund’s £20m direct holding in Shell was compatible with the Committee’s new Investment Strategy as agreed previously. In support of this he drew the Committee’s attention to some aspects of Shell’s business model, as cited by Fossil Free Oxfordshire (FFO):
- Shell was investing less than 4% of its capital expenditure on renewables;
- Shell was a member of trade bodies that routinely adopted positions that were not consistent with ‘a swift and orderly low-carbon transition that kept global warming below 2 degrees centigrade’;
- It was FFO’s view that Shell was not committed to limiting global warming to safe levels and its renumeration policy encouraged executives to maintain or even increase hydrocarbon production;
- Carbon tracker, a financial NGO, had calculated that Shell was spending so much on fossil fuel exploration and production that, in this scenario, if it continued this rate of expenditure up to 2025, it would be left with 77 billion dollars of stranded assets, which was at least 20% of Shell’s capital expenditure up to 2025;
- In FFO’s view, Shell’s plan was to sell fossil fuel products indefinitely, thereby contributing to climate change and the undermining of the global economy which therefore reduced the long term returns on the Pension Fund’s other investments. Shell was shifting its focus to natural gas but burning this still produced CO2.
Taking the above aspects of Shell’s business model, he asked the Committee how the investment in Shell was compatible with its fiduciary duties to pursue investments with a good balance of risk and return given its ‘insubstantial contribution to changing our energy future’. He suggested that the Committee was employing managers that had a short-term investment horizon that could not properly account for climate risk.
In response to Mr Wallis’s questions, Sean Collins undertook to circulate a response from the Fund Manager in relation to investment in Shell. He reminded the Committee that the ESG policy was part of the Investment Strategy Statement which would be next reviewed as part of the annual review of the policy statements at the next meeting in June. He also pointed out that Brunel PP may, or may not, take a different view to the current Fund Manager with regard to investment in Shell.