Unions supporting Pension Plan Divestment with practical guides

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.

UNISON launches a campaign for pension fund divestment with a Guide for Local Unions

uk MONEYOn 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.

Greener Jobs AllianceInformation 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

U.K. Rolls out Green Policies, including Fighting Plastics, Phasing Out Coal, and Encouraging Divestment

Theresa May 2018 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).

 

New York City and State announce plans to divest pension funds; Canadian Public Pension fund holds on to coal

I love new yorkNew York City Mayor Bill diBlasio captured headlines on January 10 2018 for his announcement that New York City will divest from fossil fuels and will sue Exxon and other oil companies for the damages of Superstorm Sandy.   Yet  it was actually on December 19 that New York City Comptroller Scott Stringer and New York State Governor Andrew Cuomo  first announced separate proposals to freeze current fossil fuel investments, divest New York’s public pension funds from fossil fuels, and reinvest in renewable energy.    Common Dreams summarized the announcements in ” ‘Undeniable Victory’: Cheers Follow Proposals to Divest Massive New York Pensions From Fossil Fuels”Reaction from 350.org (Dec. 19)  emphasized the importance of five years of citizen activism , and quoted Bill McKibben, who emphasized the symbolic importance of New York’s announcement:  “Coming from the capital of world finance, this will resonate loud and clear all over the planet. It’s a crucial sign of how fast the financial pendulum is swinging away from fossil fuels.”   (As further proof, in November, administrators of Norway’s $1 trillion sovereign wealth fund recommended no further investment in fossil fuels and  divestment from existing oil and gas shares , and in the U.K., legal changes are in the works to ease divestment for pension funds.)

At the state level,   Governor Cuomo’s press release  states:  “Governor Cuomo and Comptroller DiNapoli will work together to create an advisory committee of financial, economic, scientific, business and workforce representatives as a resource for the Common Retirement Fund to develop a de-carbonization roadmap to invest in opportunities to combat climate change and support the clean tech economy while assessing financial risks and protecting the Fund.” The New York Common Fund of the state manages approximately $200 billion in retirement assets for more than one million New Yorkers and is  heavily invested in fossil fuels, with nearly $1 billion invested in ExxonMobil alone.

At the city level, officials have set a goal of divesting the city’s  funds from fossil fuel companies within five years , according to the press release from the Office of the Comptroller,  which also highlights the complex process involved.  In February 2017,  the Office of the Comptroller had issued a  press release  stating,  “the Trustees of the New York City Pension Funds … will conduct the first-ever carbon footprint analysis of their portfolios and determine how to best manage their investments with an eye toward climate change. In the 21st century, companies must transition to a low-carbon economy, and a failure to adapt to the realities of global warming could present potential investment risks.”  The New York City pension fund includes municipal employees, teachers, firefighters and police.

Related reading re New York activism : The Divest NY website;  “How New Yorkers won fossil fuel divestment”  from the Indypendent (Jan. 12); and Noami Klein’s article in The Intercept (Jan. 11).

Contrast the New York divestment announcements with the continued fossil fuel investment of the Canadian Pension Plan Investment Board (CPPIB), revealed in two new reports.  In early December, Friends of the Earth Canada, as part of its ongoing campaign,  released  Canadian Coal Investment: Powering Past the Coal Alliance, and Urgewald, a German organization, released Investors vs. the Paris Agreement.  The two reports “present a compelling picture of entrenched investors holding onto the old dirty economy and its growing risks at a time when politicians are committing to the phase out of coal.” – specifically, the Powering Past Coal Alliance launched by Canada and Great Britain at COP23 in Bonn in 2017.  The Powering Past Coal Declaration commits governments to phasing out existing traditional coal power and placing a moratorium on any new traditional coal power stations without operational carbon capture and storage, and commits all partners to supporting clean power through their policies and investments, as well as restricting financing for traditional coal power stations without operational carbon capture and storage. In an October 2017  press release,  Friends of the Earth representatives asked, “Why is the CPPIB ignoring government policy and undermining Canada’s diplomatic efforts to lead a global phase-out of coal?” . To date, there has been no public statement adjusting  the Sustainable Investing position of the CPPIB to bring it in line with the Powering Past Coal Alliance Declaration.

Canadian Coal Investment: Powering Past the Coal Alliance calculates the CPPIB’s total investment in coal at $12.2 billion Cdn., with $267 million of that in new coal projects . In a global ranking in Investors vs. the Paris Agreement, Urgewald found that Canada is the 8th largest investor in new coal development, and names several Canadian institutions in its Top 100 Investors list, including SunLife  (ranked #31 with $895 million invested); Power Financial Corporation (#53 with $631 million invested); Caisse de dépôt et placement du Québec ( #71 with $433 million invested); Royal Bank (#86 with $356 million invested); and Manulife Financial ( #98 with $282 million invested).

Also of interest:  “Failure to Launch” in Corporate Knights  magazine (Jan. 15 2018), which provides a serious discussion of the problems of pension plan regulation as the answer to its tagline question: “Why are Canadian pension funds dragging their feet when it comes to climate change?”

 

 

Corporate Climate Risk Disclosure needed to protect Pensions

To protect pensions, companies should be required to come clean on climate risk” writes Keith Stewart of Greenpeace Canada in an Opinion piece in the National Observer on November 27.  Stewart reports that Greenpeace Canada has filed a formal request under Ontario’s Environmental Bill of Rights, for the Ontario government to review the need for mandatory disclosure of climate-related risks in corporations’ financial filings. The government’s response is expected by the end of 2017.  This is the latest of recent and ongoing calls for increased corporate disclosure of the risks posed by climate change,  to protect investors and financial stability.  The issue has even made it to the conservative Report on Business of the Toronto Globe and Mail newspaper, in  “Business risk from climate change now top of mind for Canada’s corporate boards” (November 22)  . The article warns that Canada’s  stock markets are  particularly vulnerable to a potential “carbon bubble” in the valuations of fossil-fuel-dependent companies, given that the Toronto Stock Exchange is so heavily weighted with energy and mining companies (20 per cent for that category, as compared with only 2 per cent for clean technology and renewable-energy companies).  And that’s not the worst:  on the TSX Venture Exchange, mining and oil and gas companies account for 68 per cent of the index.  (Such a resource sector dependency was part of the reasoning given by the Norweigian Wealth Fund for its proposal to divest oil and gas investments (Nov. 16)).

Another related Globe and Mail article provides an excuse for the current state of climate risk disclosure in Canada in  “Companies Looking to Report Environmental Data Also Navigate Inconsistent Frameworks” (Nov. 22) . The article states that “There is a dizzying number of best-practice guidelines for climate disclosures” and lists the major ones – with information drawn largely from the Carrots & Sticks database . In fact, Carrots & Sticks lists  nine sustainability reporting instruments unique to Canada, in addition to widely-recognized international ones such as the Principles for Responsible Investment (PRI) Reporting Framework  and the OECD Guidelines for Multinational Enterprises  .  (Carrots & Sticks  is an initiative begun in 2006 by KPMG International, Stichting Global Reporting Initiative, UNEP, and the Centre for Corporate Governance in Africa, with the goal of encouraging and harmonizing financial disclosure guidelines.)

Most recently, the Task Force on Climate-related Financial Disclosures, led by Marc Carney and Michael Bloomberg, released their  landmark Final Report and Recommendations in 2016. The following Canadian pension funds have, at least on paper, supported it:  Canada Pension Plan Investment Board, Ontario Teachers’ Pension Plan, OPTrust, the Caisse de dépôt et placement du Québec and the British Columbia Investment Management Corporation.  The Canadian Securities Administrators  launched a Climate Change Disclosure Review  in March 2017 to investigate and consult re Canadian practice, which will issue a report “upon completion of its review”.

And across the globe in Australia, the  Australian Prudential Regulation Authority (APRA), the  regulator of the financial industry, has  also announced an industry-wide review of climate-related disclosure practices.  On November 29, an Executive Board member of the APRA delivered a speech, “The weight of money: A business case for climate risk resilience” , in which he outlines the Australian perspective on climate-related financial risks, and states:  “So while the debate continues about the physical risks, the transition to a low carbon economy is underway, and that means the so-called transition risks are unavoidable: changes to market sentiment, new financial or environmental regulations, or the emergence of new technologies with the potential to prompt a reassessment of the value of a large range of assets, and consequently the value of capital and investments.”  The speech is summarized in The Guardian.