On October 7, the National Observer reported “Norway public pension fund severs final link with Canada’s oilsands” . The article describes that KLP, which manages the pensions of Norway’s 900,000 nurses, firefighters and other local and state government employees, has sold off US$33 million worth of equity holdings and US$25 million in bonds from Canada’s Cenovus Energy, Suncor Energy, Imperial Oil (majority owned by ExxonMobil) and Husky Energy, as well as Russia’s Tatneft PAO. This follows the June 2019 vote by the Norwegian Parliament to to tighten the coal exclusion criteria of Norway’s Government Pension Fund Global (GPFG), and the October 1 decision by the GPFG to divest from oil exploration companies (although it still maintains investment in downstream and integrated ventures). The moves are seen as reflective of the instability of oil and gas investments, and it is notable that the KLP fund has had a 22.8 percent return so far this year, 1.5 per cent ahead of its benchmark.
In contrast to the Norweigian pension administrators, the Canada Pension Plan Investment Board (CPPIB) as recently as March 2019 invested $1.34 billion in a joint venture which will expand fracking in the western Marcellus and Utica shale basins of the U.S.. The CPPIB manages $400 billion to support the public pensions of Canadians, and continues to hold hundreds of millions of dollars in oil and gas companies, including Enbridge , Suncor and Pembina Pipeline. The Green Party of Canada platform in the 2019 election commits to “regulate the CPP Investment Board to require divestment of coal, oil and gas shares and ensure that all investments are ethical and promote environmental sustainability.”
Another recent, high-profile divestment: The University of California announced that by the end of September, the university’s $70 billion pension fund and $13.4 billion endowment fund will have divested all investments related to fossil fuel extraction. The reason given: “The reason we sold some $150 million in fossil fuel assets from our endowment was the reason we sell other assets: They posed a long-term risk to generating strong returns for UC’s diversified portfolios.” A September 18 article in Vox is one of many reporting on this high-profile decision.
The British Columbia Investment Management Corporation (BCI) is the fourth largest pension fund manager in Canada, and controls capital of $135.5 billion, including the pension funds of the province’s public employees. A June report asks the question: is BCI investing funds in ways that support the shift to a two degree C global warming limit? The answer is “no”, and in fact, fossil fuel investments have been increasing, according to the authors of Canada’s Fossil-Fuelled Pensions: The Case of the British Columbia Investment Management Corporation . For example, BCI boosted its investment in Kinder Morgan, owner of the Trans-Mountain pipeline, to $65.3 million in 2017 from $36.7 million in 2016.
An article in the Victoria B.C. Times Colonist newspaper summarizes the study and includes reaction from one of the authors, James Rowe, an associate professor at University of Victoria. Rowe states: “BCI claims to be a responsible investor. …But we find some hypocrisy in that we don’t find any good signs they are investing with climate change in mind.” The article also quotes an email from BCI, which defends the investment in Kinder Morgan, as “a passive investment held inside funds designed to track Canadian and global markets.” Further, it states, “BCI does invest in oil and gas companies, but that particular sector accounts for a significant portion of the Canadian economy. It’s about 20 per cent of the composite index on the Toronto Stock Exchange.” For more from BCI, see their website which provides their 2017 Responsible Investing Annual Report , as well as a Responsible Investing Newsletter, with the most recent issue (Oct. 2017) devoted to “Transparency and Disclosure”.
Canada’s Fossil-Fuelled Pensions: The Case of the British Columbia Investment Management Corporation makes the following recommendations so that BCI can align its investments with the 2°C limit:
- “A portfolio-wide climate change risk analysis to determine the impact of fossil fuels on BCI’s public equity investments in the context of the 2°C limit. And, subsequent disclosure of all findings to pension members.
- Divestment. The surest way to address the financial and moral risks associated with investing in the fossil fuel industry is to start the process of divestment: freezing any new investment and developing a plan to first remove high-risk companies from portfolios, particularly coal and oil sands producers, and then moving toward sector-wide divestment.
- Reinvest divested funds in more sustainable stocks. The International Energy Agency estimates that trillions of dollars of investment are needed in the renewables sector to support the transition away from fossil fuels.”
The report is part of the Corporate Mapping Project (CMP), jointly led by the University of Victoria, the Canadian Centre for Policy Alternatives, and Parkland Institute. CMP is a research and public engagement initiative investigating power dynamics within the fossil fuel industry.
In Spring 2018, the Labor Network for Sustainability and DivestInvest Network jointly released a new guide: Should your union’s pension fund divest from fossil fuels? A guide for trade unionists . The guide begins with an introduction to union pension plans in the U.S., including how they are governed, and the legal and administrative safeguards designed to protect members’ money. It also recounts the role of union pension fund divestment in the South African struggle against Apartheid, describes the current global campaign for divestment from fossil fuels, and how and why unions are participating in that movement. The final section of the guide provides practical guidelines for union divestment campaigns.
Inspiration and a practical example of such a campaign can be found in the article “How New York City Won Divestment from Fossil Fuels”. The article, originally posted in Portside, is written by by Nancy Romer, a member of the Environmental Justice Working Group of the Professional Staff Congress of the City University of New York and an activist in the divestment campaign which led to the January 2018 decision by New York City to divest $5 billion of its pension funds (and to sue ExxonMobil, Shell, BP, Chevron, ConocoPhillips).
The Guide and Nancy Romer’s article are available at a new Divest/Invest Hub on the LNS website, with plans for more campaign case studies and sample resolutions to be added. Guides with similar aims have been produced in the U.K.: for public sector unions: Local Government Pension Funds – Divest From Carbon Campaign: A UNISON Guide (January 2018) ; in 2017, Friends of the Earth-U.K. published Briefing: Local government pensions: Fossil fuel divestment and Friends of the Earth- Scotland published Divest Reinvest: Scottish Council Pensions for a Future worth living in . The Public and Commercial Services Union published Divest to Reinvest in 2016.
On January 10, 2018, the U.K. union UNISON launched a campaign to encourage members of local government pension schemes to push for changes in the investment of their funds – specifically, to “explore alternative investment opportunities, allowing schemes to sell their shares and bonds in fossil fuels and to go carbon-free.” A key tool in this campaign: Local Government Pension Funds – Divest From Carbon Campaign: A UNISON Guide, which states: “Across the UK there are nearly 50 divestment campaigns targeting local government pension funds ….. In September this year, it was revealed that a total of £16 billion is invested in the fossil fuel industry by Local Government Pension funds.” The new Guide explains how the U.K. pension system works for local government employees, and provides case studies of existing divestment campaigns. In addition, it provides “Campaign Resources”, including a model campaign letter, a glossary of pension and investment terms, and it reproduces the Pensions and Climate Motion passed at the 2017 UNISON Delegates conference. The Guide was written by UNISON, in collaboration with ShareAction – a registered U.K. charity that promotes responsible investment practices by pension providers and fund managers.
Information about the divestment campaign, as well as information about the National Auditor’s Report re the U.K. Green Investment Bank, is included in the January-February issue of the newsletter of the Greener Jobs Alliance , a U.K. partnership of “trade unions, student organisations, campaigning groups and a policy think tank.” The Greener Jobs Alliance is part of the Campaign against Climate Change Trade Union Group, which is organizing an event on March 10 in London: Jobs & Climate: Planning for a Future that Doesn’t Cost the Earth.
Facing criticism for recent policy reversals which have resulted, for example, in falling investment in clean energy in the U.K. in 2016 and 2017 , the government has recently attempted a re-set with its policy document: A Green Future: Our 25 Year Plan to Improve the Environment , released on January 11. “Conservatives’ 25-year green plan: main points at a glance” (Jan. 11) in The Guardian summarizes the initiatives, which focused on reducing use of plastics (in line with a recent EU decision), encouraging wildlife habitat, and establishment of an environmental oversight body. Specifics are promised soon; the Green Alliance provides some proposals in “Here’s what Theresa May should now do to end plastic pollution” (Jan. 11). George Monbiot is one of many critics of the government policy, in his Opinion Piece.
In the lead-up to the long-term Green Future policy statement, other recent developments have included: 1. Changes to investment regulations to encourage divestment. “Boost for fossil fuel divestment as UK eases pension rules” appeared in The Guardian on December 18 , stating: “in what has been hailed as a major victory for campaigners against fossil fuels, the government is to introduce new investment regulations that will allow pension schemes to ‘mirror members’ ethical concerns’ and ‘address environmental problems.’ The rules are expected to come into force next year after a consultation period and will bring into effect recommendations made in 2014 and earlier this year by the Law Commission. ”
2. Coal Phase-out: Also, on January 4, the British government responded to a consultation report by announcing CO2 limits to coal-fired power generation. By imposing emissions limits, the government seeks to phase out coal-fired power by 2025, but still to allow flexibility for possible carbon capture operations, and for emergency back-up energy supply. The consultation report, Implementing the end of unabated coal: The government’s response to unabated coal closure consultation , capped a consultation period which began in 2015. The government’s policy response is summarized in the UNEP Climate Action newsletter here (Jan. 5).