Councillor Hodgson to move:
Devon County Council notes:
· The United Nations Paris 2015 Agreement commits our governments to keep the global temperature increase to under 2 degrees and aim for 1.5 degrees. Carbon budgets produced by the Intergovernmental Panel on Climate Change, United Nations and the International Energy Agency show that preventing two degrees of warming relies on not burning 60-80% of all proven fossil fuels.
· With COP26 taking place in Glasgow in November 2021, there is increased emphasis by the UK government on showing global climate leadership, especially in relation to finance. Divesting our pension is a clear and meaningful action that can be taken at a local government level.
· Fossil fuel investments are financially risky as a result of both the Covid19 pandemic and the global transition to a more sustainable economic and environmental model. They are now being consistently out-performed by renewables.[2]
· Former Bank of England Governor Mark Carney warned in December 2019 that fossil fuel investments risk becoming “stranded assets” (i.e., worthless) as investors exit the sector. “A question for every company, every financial institution, every asset manager, pension fund or insurer – what’s your plan?”
· As continued investments in fossil fuels pose material financial risks to portfolios, funds have fiduciary duties to consider the benefits of decarbonising as part of their investment strategies. Fiduciary duty is defined by the Law Commission as ‘ensuring that pensions can be paid, ensuring that this is undertaken at the best possible value’.
· Pension funds have a legal duty to treat members “fairly as between them”. That means taking seriously the longer-term interests of younger members who may well be affected more by the climate transition.
· Continued engagement with fossil fuel companies does not stop them polluting and recent court action with Shell (DCC Treasurer’s Investment Management Report to Pension Fund Committee 17.09.21) indicates that company’s resistance to reduce its reliance on fossil fuels in line with the Paris Agreement.
This Council commits to:
1. Reviewing its Investment Strategy and developing and implementing a Responsible Investment Policy which rules out new investments in fossil fuel companies and divests as a matter of urgency from those fossil fuel companies it is currently invested in.
2. Calls on Devon County Council’s Pension Fund to divest from fossil fuels by requesting its representative(s) on the Pension Fund Committee to call for the development and adoption of responsible investment policies which:
a. Immediately freeze any new investment in the top 200 publicly-traded fossil fuel companies.[3]
b. Divest from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds to achieve net zero by 2030, in line with the aspirations of our Devon Carbon Plan. This requires a faster rate of change than the current 7% transition per annum.
c. Set out an approach to quantify and address climate change risks affecting all other investments.
d. Actively seek to invest in companies that will reduce greenhouse gas emissions and minimise climate risk.
e. Seek investment in the Paris Aligned Benchmark via Brunel as part of the transition.
3. Recognising that fossil fuel investments should be considered as part of the council’s ‘carbon footprint’ and divesting our pension fund is one of the most impactful steps we can take to reduce our impact on our community and the world. A detailed report on the carbon footprint of the Devon Pension Fund investments will be provided to this Council
4. Requests the Devon Pension Fund to poll its individual investors for their views of divestment from fossil fuel companies and increased investment in companies that support sustainable initiatives such as renewable energy.
Footnotes
[1] 2021 figures taken from the report Divesting to protect our pensions and the planet – An analysis of local government investments in coal, oil and gas. Available at: https://www.divest.org.uk/councils
[2] Energy Investing: Exploring Risk and Return in the Capital Markets, Joint Report by the International Energy Agency and the Centre for Climate Finance & Investment, Paris. Available at: https://www.iea.org/reports/energy-investing-exploring-risk-and-return-in-the-capital-markets
[3] As determined by the most recent Carbon Underground 200 list.
Decision:
(Councillor Davis declared a Disclosable Pecuniary Interest in this matter by virtue of being in receipt of a Local Government Pension and withdrew from the meeting during its consideration).
In accordance with Standing Order 6(6) the Notice of Motion was referred, without discussion, to the Investment and Pension Fund Committee for consideration.
Minutes:
(Councillor Davis declared a Disclosable Pecuniary Interest in this matter by virtue of being in receipt of a Local Government Pension and withdrew from the meeting during its consideration).
Councillor Hodgson MOVED and Councillor Biederman SECONDED
Devon County Council notes:
· Devon County Council has around £157 Million invested in fossil fuels via the Local Government Pension Scheme. This is about 3.9% of its total fund and currently the 5th highest of all the Local Government Pension schemes in the UK[1]
· The United Nations Paris 2015 Agreement commits our governments to keep the global temperature increase to under 2 degrees and aim for 1.5 degrees. Carbon budgets produced by the Intergovernmental Panel on Climate Change, United Nations and the International Energy Agency show that preventing two degrees of warming relies on not burning 60-80% of all proven fossil fuels.
· With COP26 taking place in Glasgow in November 2021, there is increased emphasis by the UK government on showing global climate leadership, especially in relation to finance. Divesting our pension is a clear and meaningful action that can be taken at a local government level.
· Fossil fuel investments are financially risky as a result of both the Covid19 pandemic and the global transition to a more sustainable economic and environmental model. They are now being consistently out-performed by renewables.[2]
· Former Bank of England Governor Mark Carney warned in December 2019 that fossil fuel investments risk becoming “stranded assets” (i.e., worthless) as investors exit the sector. “A question for every company, every financial institution, every asset manager, pension fund or insurer – what’s your plan?”
· As continued investments in fossil fuels pose material financial risks to portfolios, funds have fiduciary duties to consider the benefits of decarbonising as part of their investment strategies. Fiduciary duty is defined by the Law Commission as ‘ensuring that pensions can be paid, ensuring that this is undertaken at the best possible value’.
· Pension funds have a legal duty to treat members “fairly as between them”. That means taking seriously the longer-term interests of younger members who may well be affected more by the climate transition.
· Continued engagement with fossil fuel companies does not stop them polluting and recent court action with Shell (DCC Treasurer’s Investment Management Report to Pension Fund Committee 17.09.21) indicates that company’s resistance to reduce its reliance on fossil fuels in line with the Paris Agreement.
This Council commits to:
1. Reviewing its Investment Strategy and developing and implementing a Responsible Investment Policy which rules out new investments in fossil fuel companies and divests as a matter of urgency from those fossil fuel companies it is currently invested in.
2. Calls on Devon County Council’s Pension Fund to divest from fossil fuels by requesting its representative(s) on the Pension Fund Committee to call for the development and adoption of responsible investment policies which:
(a) Immediately freeze any new investment in the top 200 publicly-traded fossil fuel companies.[3]
(b) Divest from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds to achieve net zero by 2030, in line with the aspirations of our Devon Carbon Plan. This requires a faster rate of change than the current 7% transition per annum.
(c) Set out an approach to quantify and address climate change risks affecting all other investments.
(d) Actively seek to invest in companies that will reduce greenhouse gas emissions and minimise climate risk.
(e) Seek investment in the Paris Aligned Benchmark via Brunel as part of the transition.
3. Recognising that fossil fuel investments should be considered as part of the council’s ‘carbon footprint’ and divesting our pension fund is one of the most impactful steps we can take to reduce our impact on our community and the world. A detailed report on the carbon footprint of the Devon Pension Fund investments will be provided to this Council
4. Requests the Devon Pension Fund to poll its individual investors for their views of divestment from fossil fuel companies and increased investment in companies that support sustainable initiatives such as renewable energy.
Footnotes
[1] 2021 figures taken from the report Divesting to protect our pensions and the planet – An analysis of local government investments in coal, oil and gas. Available at: https://www.divest.org.uk/councils
[2] Energy Investing: Exploring Risk and Return in the Capital Markets, Joint Report by the International Energy Agency and the Centre for Climate Finance & Investment, Paris. Available at: https://www.iea.org/reports/energy-investing-exploring-risk-and-return-in-the-capital-markets
[3] As determined by the most recent Carbon Underground 200 list.
In accordance with Standing Order 6(6) the Notice of Motion was referred, without discussion, to the Investment and Pension Fund Committee for consideration.