GMPF and fossil fuel divestment – update

First the good news: we understand that Greater Manchester Pension Fund has agreed to update its “responsible investment policy” in line with current thinking on Trustees duties.  That is to say, it will now consider social and ethical considerations to “actively divest” so long as these do not harm the fund and its members financially (something they have already done with tobacco).  This is a good start, and one that follows campaigning by The Campaign Against the Arms Trade, ourselves Steady State Manchester, Friends of the Earth and Fossil Free Greater Manchester.

But in their response to Fossil Free Greater Manchester on divestment, the Fund is still saying that they have no plans to divest from fossil fuels in the medium term.  They quote approvingly a statement from the union Unison:

• “The first duty of the LGPS is to pay the staff their pension benefits when they retire”;
• “Divesting of carbon assets without having found adequate renewable investment returns would create huge economic uncertainty”; and
• “It would be irresponsible to begin any programme of disinvestment in fossil fuels that threatened in any way the ability of the funds to pay people’s pensions.”

Unison seem unaware of the actual demands from the divestment movement which are to,

  1. Make an immediate statement of principle adopting the principle of divesting from fossil fuels,
  2. Immediately stop new investments in the industry,
  3. Instruct its investment managers to wind down the  existing holdings in the fossil fuel industry over the next five years.

We are fully aware that switching some 10% of investments cannot be done overnight.  As we’ve already shown (in keeping with most analysts, including Mark Carney, the Bank of England governor), these investments are increasingly a white elephant, losing value all the time as the world wakes up to the unburnable carbon problem and as volatility increases as conventional fossil fuels become more difficult to extract (hence the heavy investment in unconventional sources such as fracked shale gas).  A managed programme of divestment/re-investment is not just sound environmental policy but it also makes good financial sense.

Meanwhile, GMPF has released an updated list of its top 20 holdings (a list that is already seven months out of date). There are some changes, with two mining companies dropping out, and the value of fossil fuel stocks lower than it was 12 months previously.  However these changes are probably less the result of divestment than of the falling quoted values of these stocks (although who knows, maybe fund managers are also waking up and switching stocks).  Likewise the amounts invested in BP and Shell are now lower, but they are still the top 2 (albeit with changed places).
UK Banks take places 3, 4, and 6 (the latter being Barclays). Al these banks have big commitment to fossil fuels (see and in Barclays case in fracking see See our annotated listing of the 2015 top 20 GMPF investments, with comparisons to last year’s data .

On a somewhat brighter note, GMPF have announced a joint programme of investment in “renewable energy”.  The first of these is a £9M investment in a plant making biogas from food industry waste. This is broadly positive: some biogas capacity will be important for rapid response electricity generation in a renewable energy future.  But other investments to come may be more problematic, since not all biomass projects are carbon neutral: it depends on the specifics.  Indeed wood burning from old growth forest makes a large contribution to European greenhouse gas emissions.


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