SHETLAND Islands Council has rejected criticism from environmental pressure group Friends of the Earth that it is investing too much of its pension fund in companies that are seen to be driving climate change.
A report published on Thursday by Friends of the Earth Scotland, public sector trade union UNISON and Scottish think-tank Common Weal said the SIC was investing more than £30 million of its pension fund – around 8.2 percent of its overall value – in fossil fuels.
The report alleges that the SIC is not acting in the best interests of the fund’s beneficiaries when investing heavily in oil, gas and coal companies.
But political leader Gary Robinson said the council’s foremost duty was to provide for “our pensioners and this is all the more important when you have an underfunded pension scheme such as ours”.
In addition, the council’s fund managers were already duty bound to act environmentally and socially responsible, he said.
“It’s a statutory requirement for all local government pension fund managers in the UK to be signed up to the United Nations Principles for Responsible Investment and all of the SIC pension fund managers have done so,” Robinson said.
“Essentially this requires fund managers, for example, to use their vote at companies’ AGMs to positively influence any company they invest in towards better environmental, social and corporate governance.
“The council’s pension fund is invested in broadly similar funds to many other local government pension schemes.
“In addition to this, I won the unanimous support of the last council to sign up to these principles for all of the council’s investments.”
The FoE report found that Shetland Islands Council:
- Invested £30.1 million in fossil fuel stocks or 8.2 per cent of their pension fund: the second highest proportion in Scotland;
- Has not invested any of their pension fund directly into renewable energy schemes or social housing schemes;
- Offered no evidence of having discussed how climate change affects its investment strategy.
Divestment campaigner at Friends of the Earth Scotland, Ric Lander, said: “Council pension funds have huge clout and can shape our future. It’s time they used this power to invest in a future worth living in.
“Only three councils have any investments in social housing and renewable energy in Scotland despite strong returns available and many local benefits of these schemes. The majority of council pensions are invested in stocks and shares, which bring few tangible local benefits.
“Divesting from fossil fuels is an opportunity to contribute to a brighter future. That would be good news for Shetland pension fund members and good news for all of us.
“With Scotland going to the polls for local elections in May we want to see prospective councillors getting serious about responsible investment.”
UNISON’s Scottish organiser Dave Watson added: “Too many of our pension funds are investing in obsolete technologies and risking our members hard earned contributions.
“The future of energy is green, and it is within sight. Our pension funds need to be part of the future, not the past.”