Agenda item

Members of the public who wish to speak at this meeting can attend the meeting in person or ‘virtually’ through an online connection. To facilitate ‘hybrid’ meetings we are asking that requests to speak are submitted by no later than 9am four working days before the meeting i.e., 9am on Monday 27 February 2023.

Requests to speak should be sent to khalid.ahmed@oxfordshire.gov.uk  If you are speaking ‘virtually’, you may submit a written statement of your presentation to ensure that if the technology fails, then your views can still be taken into account. A written copy of your statement can be provided no later than 9am 2 working days before the meeting. Written submissions should be no longer than 1 A4 sheet.

Sam Thomas, a representative of Oxfordshire County Council Staff-Led Climate Action Group attended the meeting and addressed the Committee.

“The Oxfordshire County Council Staff Climate Action Group asks you to instruct Brunel to provide:

1. An Active United Kingdom Paris Aligned Benchmark portfolio, that would allow Brunel client funds to invest directly in UK equities while avoiding exposure to companies engaged in Fossil Fuel activities.

2. ‘An Impact Fund’, which would focus on investing in companies that are developing solutions to the climate emergency, for example by providing capital to smaller, growing ‘green’ companies by directly buying their bonds or providing loans (in primary markets), therefore providing them with capital and liquidity. Brunel’s ‘Cornwall Low Impact’ Portfolio provides an encouraging local model along these lines.

Firstly, we would like to thank you for all the work you are doing to manage the Oxfordshire local government pension scheme and ensuring that investments are being made on behalf of scheme members to provide an adequate livelihood on retirement. We also appreciate and note that in last September’s report ‘Funding Strategy Statement and 2022 Fund Valuation’ it states: “climate risk considerations (are) to be built directly into funding strategy decisions”.

Further, we welcome the fact that you acknowledged the need to create a more ethical, sustainable pension fund and in 2021 you chose to move 15% of our money to the Passive Paris-Aligned Equities fund when that fund became available. The Staff Climate Action Group members feel this is a positive move in the right direction.

However, our members are becoming increasingly concerned about climate change and the actions that we must all make, collectively and at pace, to mitigate the rate of global heating for our world. Indeed, our employer, Oxfordshire County Council sets its key priority as “putting climate action at the heart of our work” and states an ambition of decarbonising the authority’s estate and operations by 2030, and transitioning Oxfordshire as a county to net zero ahead of the national target of 2050.

Moreover, our organisation has signposted us to the ‘Climate Action Oxfordshire’ website https://www.climateactionoxfordshire.org.uk/ a website hosted on behalf of all of the Oxfordshire Councils agreeing collective action on this agenda, to inform us how to change our own personal behaviours - at home and at work. We are encouraged to insulate our homes, turn down our thermostats, use active travel methods to commute to work and change to a plant-based diet. Furthermore – and which the website shows having the maximum impact on our carbon footprint – we are advised to “choose ethical banking, pensions and investments”, and it directs us to ‘Bank.Green’ for our personal banking, and ‘Ethex’ for a directory of investment opportunities in the sustainable sector. According to other sources eg a report by Make My Money Matter (MMMM), Aviva, and Route2, and widely reported by PensionsAge, the Guardian and the BBC, switching your pension to a ’green’ investment portfolio has twenty one times the impact of other personal changes an individual can make;  https://makemymoneymatter.co.uk/21x/#act-now;

Therefore, we feel it is hugely disappointing that the majority of our pension scheme continues to be invested in funds which include many companies, banks and products that do not have any positive environmental, ethical and sustainable credentials. We can see that at least four of the funds we hold include fossil fuel companies, who are involved in the active expansion and exploration of fossil fuels, including fracking. These funds are: Active UK, Active Global High Alpha, Active Emerging Market, Active Global Sustainable Equities and Multi-Asset Credit. Collectively; we invest about 35% of our Pension Fund into them.

If we focus on: ‘Active UK Equity’, where we invest about 15% of our members’ money, these holdings include: Shell, Harbour Energy and BP. These are just a few of the many global companies in several of the Brunel holdings which are causing great harm to people and planet. This undermines the Brunel claim that; ‘In collaboration with all our stakeholders we are forging better futures by investing for a world worth living in.’ (Brunel Pension Partnership, 2021)

In line with the International Energy Agency’s report (International Energy Agency, 2021) looking at suitable pathways to achieving net zero by 2050, one of the key policy recommendations is to stop investment into new fossil fuel exploration. It is clear that the companies referred to above, and many other oil and gas companies, are pursuing new and existing activities that are clearly not in line with achieving the representative Councils’, the UK’s and the Paris Commitments’ net zero ambition. This is very evident from a recent report by Carbon Tracker on major oil and gas companies’ future capital expenditure plans, and informs us that, ‘regarding the expansion of their capex plans: 62% of investments approved in 2021/Q1 2022 (or $103bn) were inconsistent with a Paris-aligned pathway (the IEA’s 1.7°C Announced Pledges Scenario), including $58bn that was outside even a 2.5°C outcome.’ https://carbontracker.org/reports/paris-maligned/

We are also concerned about the Pension Funds’ continued investments in oil and gas companies from the perspective of the potential negative impact on future value, with several large financial institutions now warning of massive write-downs due to stranded assets eg ‘The rapidly-diminishing returns of oil production may result in investors suffering from stranded assets as a result of their inability to profit from depreciating energy reserves. Even the investment bank Goldman Sachs has acknowledged the scale of this problem, publishing a study in December 2015 finding that $1 trillion of future oil investments are unprofitable. Past research carried out by the Carbon Tracker Initiative has also shown that major fossil fuel companies risk wasting $2.2 trillion in investments which may turn out to be uneconomic.’ https://bylinetimes.com/2023/01/05/energy-firms-fossil-fuel-investments-radically-at-odds-with-climate-change-obligations/

We warmly welcome Brunel’s commitment to net zero, and the launch of a new series of Paris-aligned benchmarks that have been developed in coordination with FTSE Russell. We are also mindful of Brunel’s moves in the right direction on climate related issues and the fact that this year Brunel has been awarded Europe’s ‘IPE Award’ which focused on its launch of the ‘Cornwall Low Impact Pension Portfolio’; a fund that invests in renewables and affordable housing in Cornwall: Brunel wins Europe-wide IPE Impact Investing award - Brunel Pension Partnership  (Brunel Pension Partnership, 2022).

We appreciate the continued transparency, clear information and engagement we have had on this complex subject with Brunel through Sean Collins - Service Manager, Pensions, and Alistair Bastin - Pension Board member. We recommend that this dialogue with members continues and ensures that our members’ voices are heard, as we urge Brunel to make further rapid changes to our investment holdings, including the development of new and climate appropriate funds.

Brunel is promising us ‘better futures by investing for a world worth living in.’ In bleak times with ever worsening news about the state of our planet, the Staff Climate Action Group desperately hopes that these aren’t just empty words or, worse still, greenwashing. We hope that you will urge Brunel to consider an Active UK PAB zero fossil fuel companies fund and an Impact Fund that we are suggesting, such that the LGPS can be part of the solution to the climate emergency rather than an ongoing part of the problem.”