Minutes:
Mr Peter Wallis addressed the Committee on behalf of Fossil Free Oxfordshire and in his capacity as a scheme member of the LGPS, in relation to Agenda Item 8 – Corporate Governance and Socially Responsible Investment.
He told the Committee that he had had a number of conversations with a number of his LGPS colleagues who felt as strongly as he about both the ethical and financial implications of how the Pension Fund was invested.
He pointed out that, in his view, scheme members’ interests included, first ensuring the Fund could pay LGPS members’ pensions on retirement by obtaining good returns and avoiding unduly risky investments; and secondly, investing in a way that protected their other long-term interests, notably giving protection from climate change. He directed the Committee’s attention to the Law Commission’s review which advised that Committee’s may also take into account non-financial factors such as the views of members and quality of life, as long as this did not result in significant financial detriment.
Mr Wallis also expressed the view that there was a financial risk associated with fossil fuel investments, pointing out that there was evidence that portfolios containing no fossil fuel holdings could perform just as well as those that included them. He also cited a very recent article in the Telegraph which spoke of a possible draconian ‘tax’ or carbon on carbon emissions which would change the financial; calculus for coal, oil and gas.
Mr Wallis referred to Fossil Free Oxfordshire’s petition to the County Council’s Cabinet in March this year which called for disinvestment from fossil fuels, referring also to the Chief Finance Officer's report which set out an alternative to disinvestment. It set out a commitment to hold fund managers to the checklist in the Carbon Trackers transition blueprint which amounted to a process of rigorous engagement with the fossil fuel industry such as to bring about a rapid change in how energy is generated and used. As a scheme member he urged the Committee to provide the evidence from the fund managers that each of the fossil fuel companies they invested in were taking management actions in light of the comprehensive risk assessment completed in line with the Blueprint Checklist and were making decisions to exclude or include companies on this basis.
In conclusion he stressed that Fossil Free Oxfordshire were not asking the Committee to sacrifice the profitability of the pension fund for their principles, but asking the Committee to move investments away from fossil fuel companies that were not carrying out their business in a manner consistent with the Transition Blueprint checklist.
There followed a question and answer session with the speaker and his colleagues from Fossil Free Oxfordshire. Issues explored were as follows:
- A member of the Committee asked if there was a need to take action overnight given that as time went on and the fossil fuel industry declined, there would be a rapid pace of change to find new alternatives. A Fossil Free spokesperson responded that the petition presented to the County Council’s Cabinet asked for change over a 5 year period.
- In response to a question from a member of the Committee asking if, in their view, it would drag performance down if the Fund was to shift to investment in renewable energy, the Committee were informed that Fossil Free Oxfordshire were not asking for ‘like for like’ investment in fossil free technologies.
- A Committee member asked if there would be a detriment to medicine and other household treatments if investment was to cease in fossil fuel technology, given the heavy contribution by fossil fuel companies to their realm. A spokesperson responded that burning fossil free oil was indeed an excellent resource and had many uses, but that this was a very short-term view, and future generations would be horrified to know that this generation had opened itself up to spoiling the climate.
- A Committee member asked how representative was Fossil Free Oxfordshire of the general Oxfordshire public. A spokesperson responded that there were no other industries that carried the risks of stranded assets. Furthermore that they were not asking the Committee for a judgement on ethical issues.