Agenda item

Petitions and Public Address


Mr Gillott attended the meeting and addressed the Committee on behalf of the Staff Climate Action Group.


“The Staff Climate Action Group is an informal forum for OCC staff from any directorate that meets on the last Tuesday of every month to hear updates on the council’s climate agenda and find ways to work together to address the climate crisis. Members of the group champion climate action within their individual teams and welcome the opportunity to focus on supporting the Pension Fund Committee to be as ambitious as possible in their endeavours to address the climate emergency.


International experts agree that burning fossil fuels created the climate emergency, therefore there is considerable interest amongst the Staff Climate Action Group in the investment decisions of the Pension Fund Committee (PFC). Thank you to Sean Collins, the Pensions Service Manager, who accepted our invitation and attended our March 2021 meeting to brief the group on the committee’s progress in relation to climate risk.


We would like to congratulate the PFC for its decision last year to opt for Paris Aligned Benchmarks for 15% of the fund in passive equities, thereby effectively excluding investments in fossil fuel companies. We note that this decision to divest this part of the fund from fossil fuel (and tobacco) companies will have no financial impact on the fund. We also applaud the PFC for achieving a 17% reduction in emissions across its measurable investments, and fully support the aim to decarbonise the whole fund.


The decision over passive equities raises the question of the place of investments in fossil fuel companies in the remaining 85% of the fund. In our communications with Sean Collins, he has raised the problem of a lack of standard definition of a fossil fuel company. He mentions that Brunel continues to work with Governments and within the investment industry to develop standard definitions which will improve the level of reporting going forward, including the use of the criteria developed for the new Paris Aligned Benchmark to assess the investments held by the LGPS’s active fund managers. Sean states that this benchmark excludes a number of companies based on the revenue earned from the exploration, extraction and processing of coal, oil and gas as well as a number of energy companies based on the carbon intensity of their operations.


We ask the PFC to provide a report for this group on progress with the development of definitions of fossil fuel companies, the time frame/dates for the adoption of the Paris Aligned Benchmark, and as the definition becomes clear, the funds’ holdings in fossil fuel companies. In the meantime, we welcome the development of a listing of all investments on the pensions website and would like to request that we are sent such a listing.


We understand that there is also no standard definition of a climate positive company. However, we are interested in any examples of investments in such things as renewable technologies and sustainable housing particularly if this is specifically made as part of the Fund’s present climate policy. Oxfordshire Fair Deal Alliance has made the climate emergency its number one priority. From recent national polls we know that there is widespread support for action. A YouGov poll earlier this year found just 12% of the UK public were in favour of fossil fuel investments from pension funds. Polling from NEST in 2020 found that 65% of pension savers believed their pension should be invested in a way that reduced the impact of climate change.


From Sean’s presentation we understand that the PFC’s current position is that it is better to engage with companies to encourage them to change rather than divest from a whole investment sector (though the recent decision to divest its passive funds from fossil fuels may suggest a shift in thinking). Scientists say that 60% of current oil and gas reserves (and 90% of coal) must remain underground to meet the IPCC’s 1.5 degree target, which means that fossil fuel companies must change their business plans and stop exploring for and developing new reserves. If the PFC’s position favours engagement in rather than blanket divestment from fossil fuel companies for the remainder of the fund, the Staff Climate Action Group would like to ask for a report on the requirements being placed on fossil fuel companies to halt exploration for and development of new reserves, the timeframes for compliance and the consequences of non-compliance.


We urge the PFC to continue along a path to address climate risk in all of its investment decisions. When we asked Sean about the potential for bringing forward the 2050 target for making the fund carbon neutral, and help us to understand the barriers that would, for example prevent the fund being aligned to the council’s more ambitious 2030 target (or failing that an interim target such as 2040), he responded that ‘as a global investor with a wish to drive real world change to deliver a sustainable future (rather than simply aiming to de-carbonise our own investments without delivering real world change, and therefore leaving the Fund exposed to the same long term risks around the sustainability of the world as we currently recognise it) our timescales are heavily influenced by international responses.’ We understand this position in relation to target dates and applaud the aspiration of the Committee for setting its sights on ‘real world change’ rather than simply on financial returns. In light of the latest UN report announcing a ‘code red for humanity’, we are keen for updates on how the Pension Fund Committee is progressing with its agenda for achieving real world change and ask that the target date for a carbon neutral fund be kept under review.


Sean Collins has mentioned ways in which the Pension Fund Committee is striving to be transparent and provide information, for example through the Pension Fund web pages. As we have already found out in our email correspondence with Sean this is a complex area with potentially huge risks and benefits, which is why we value opportunities to hear directly from Sean to ask questions for clarity. We would therefore like to ask him to attend our group to provide biannual updates to provide a feedback loop between staff and the PFC.


In summary, we would like to ask Sean Collins to attend a meeting in the near future to provide us with;


         A report on progress with the development of definitions of fossil fuel companies and climate positive companies, and the time frame for the adoption of the Paris Aligned Benchmark


         A PFC report with a clear breakdown of all holdings, with any which have been specifically invested in as “Climate Solutions” highlighted


         A report on the requirements being placed on fossil fuel companies to halt exploration for and development of new reserves, the timeframes for compliance and the consequences of non-compliance.”