To receive any deputations.
Mr Mould-Ryan, a Hampshire Pension Fund scheme member, speaking on behalf of the Hampshire Pension Fund Divest Group to draw the RI Sub-Committee’s attention to a report released on 23 February 2021 by Platform and Friends of the Earth. It is reported that Hampshire Pension Fund’s fossil fuel investments were £136m as at 31 March 2020, although local campaigners had previously been unable to obtain via three separate Freedom of Information requests. Mr Mould Ryan also quoted from the report that the Hampshire Pension Fund suffered the 7th largest loss amongst LGPS funds, of £68.4m between 2017 and 2020 from investments in oil company shares. Continuing to quote from the report, Mr Mould-Ryan stated that ‘The biggest economic disruption of our modern era will be the transition from fossil fuels to renewable energy’.
Mr Mould-Ryan said he understood that Environmental, Social or Governance (ESG) issues are now a theme in all of the Hampshire Pension Fund meetings, that the Hampshire Pension Fund has appointed a Responsible Investment advisor, and that the ACCESS pool has recently appointed an ESG consultant at Minerva who are part of the Transition Pathways Initiative. These developments are welcomed and it is hoped will embed environmental considerations into every investment decision taken by the Fund, and he also welcomed the shift of the Fund’s passive investments and one managed fund into lower-carbon alternatives. However, the Pension Fund must move farther and faster.
Mr Mould-Ryan highlighted that the Transition Pathways Initiative had assessed 125 oil and gas producers, coal companies, and electricity groups on their preparedness for a lower-carbon economy. They found that no major oil, gas or coal company is on track to align their business with the Paris climate goal of limiting global temperature rise to well below 2°C by 2050. Fund manager engagement alone will not change this, as it rarely results in a shareholder resolution to alter the course of the business that the asset is held in. Engagement as a negotiating position is meaningless without an explicit threat that you may withdraw your funds, which requires having a policy to divest.
Meaningful action on climate change requires a commitment to ending the expansion and extraction of fossil fuels, so the decision to end fossil fuel investments must be taken now as a priority, and this brief must be given to consultants, advisors and investment managers working on behalf of the Fund and the ACCESS pool. However, this is not just an ESG issue. It is a classic risk issue, because the transition is fundamentally disrupting markets in a way only comparable to the rise of the internet. The Bank of England has said that in the UK up to £16 trillion of assets could be wiped out if the climate emergency is not addressed effectively.
Mr Mould-Ryan observed that item 6 on sub-committee’s agenda said that, ‘correspondence to date on investments that relate to climate change…has been received from a very small minority of the nearly 179,000 scheme members”. However the sub-committee should also note that a 2020 poll revealed that the UK public wants a radical response to climate change, with the same urgency as the response to the COVID-19 crisis, because after all, scheme members are part of the UK public.
Finally Mr Mould-Ryan noted that the Hampshire Pension Fund banked with NatWest, which itself has invested over $12 billion in fossil fuels since the Paris agreement. He suggested that a conscious choice to bank ethically would go hand in hand with a decision to end fossil fuel investments.
Mr Mould Ryan concluded by urging the RI sub-committee to read the Friends of the Earth report and thanked them for their time in hearing his deputation.