Pension Committee deputation 26/11/19



Camden Council has declared a Climate Emergency – we believe that part of taking action around this includes the Council reducing its carbon footprint, and divesting the pension fund from fossil fuel investments is one way to do this.

As a trade union of course we want a decent pension for our members, and for working class people in general, but we also want a world where we can enjoy our retirement and to know we are leaving a sustainable world for future generations.

UNISON believes that modern fiduciary duty requires that pension fund investments are made in the interests of scheme members, that the financial obligation is not to maximize returns but to ensure there is enough resources to meet the pension benefit obligation. Therefore these financial regulations do not justify investment in the fossil fuel industry, nor slowing moves to decarbonise the fund.
The Law Commission’s review of fiduciary duty stated that the principle duty is to pay pensions and that when taking non-financial matters into consideration, decision makers should not preference their own views. Rather, they should consult scheme members and have support for their investment decisions.

All our union activity demonstrates that our members want to see divestment of our pension fund. Therefore councillors and officers, who make, develop and influence these investment decisions should consult scheme members when drawing up policies on such issues as climate change, executive pay or labour rights issues.

LAPFF (Local Authority Pension Fund Forum) encourages companies to align their business models with a 2 degree scenario – however, the 2018 IPCC report highlights the need to limit global warming to 1.5 degrees. So even the basic position of the LAPFF is not good enough.

Camden’s pension fund believes that ‘robust’ engagement with companies is a better approach than placing restrictions on investment – we would like to see evidence of this being a successful approach as most of the carbon footprint reduction appears to be accidental rather than because of ‘robust’ engagement.

Using the TPI (Transition Pathway Initiative) rating as a guide is problematic and hides a multitude of detail – it seems to focus on whether or not the CEO/directors speak to the equity managing companies rather than what they do in practice. Looking at the environmental impact of some of the companies invested in tells a very different tale.

So who does Camden invest in via the equity manager companies?

Let’s look at Baillie Gifford.

Via them, our pension fund invests in BHP Billiton. This is a mining company in the oil and gas sector, and satisfies all of the TPI quality criteria to a 4* level. BHP Billiton had a copper mine in Papua New Guinea where they were successfully sued by indigenous people for environmental degradation.

In 2015, they were responsible for the Mariana dam disaster, in a Brazilian iron ore mine. 19 people died, the extent of the damage from the dam collapse is the largest ever recorded, with pollutants spreading along 670km of watercourses, polluting the water supply and destroying villages. 21 executives on the board of directors were charged with manslaughter and environmental damage, and there are legal cases from this still ongoing. Last year, they settled a class action in the US for $50m, the ongoing class action in Australia is likely to be the largest in Australian history, and also last year a $5bn class action was filed in this country on behalf of 240,000 victims of the disaster. This is one of the biggest environmental disasters in Brazil’s history.

In 2017, they were one of 90 companies responsible for two-thirds of global gas emissions since the beginning of the industrial age.

And if their environmental record wasn’t bad enough, a couple of years ago in order to increase productivity in one of their Chilean mines, they tried to force workers to accept a 4 year pay freeze, increased shift ‘flexibility’ and a 66% reduction in bonuses, leading to a major strike. In 2015, they paid a $25m fine to the US SEC for violating the ‘Foreign Corrupt Practices Act’ – they invited 176 Govt and state-owned enterprise officials on an all expenses paid package to the Beijing Olympics. Was Camden one of them? If not, you have to ask how effective investing and pressuring from within is….

Or we could look at Ryanair, also invested in via Baillie Gifford. Their carbon emissions went up almost 50% in the last 5 years. They are also the first non-coal company to join the top 10 emitters. In your report, you talk of “extensive engagement” with amongst others Michael O’Leary, Ryanair CEO. This is the same Michael O’Leary who said in an interview “I don’t accept that climate change is real. I don’t accept the link between carbon consumption and climate change.” He added that climate change fears are “complete and utter rubbish”. Again, the fact that he talks to the equity companies is irrelevant if his beliefs guide his actions. And they obviously do judging by the emissions increase.

I could go on, for instance about EOG, or as it should be known Enron Oil and Gas, who have no greenhouse gas emissions reduction target, never mind a major prosecution for willful corporate fraud and corruption, but we’d be here all night.

The point is, hiding behind a measure of engagement does not reduce carbon emissions. It also drives a coach and horses through your belief that, to quote your report, “robust engagement with companies is a better approach than placing restrictions on particular types of investment”. Just stating that the LAPFF’s 80 members have assets of over £250bn and that makes members influential when lobbying companies on members behalf simply does not wash.

Camden should be a leader in this field. Haringey and Islington have divested/announced divestment and if they can do it, so can Camden.

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