COUNCIL chiefs have been criticised for ploughing tens of millions of pounds of “unethical investments” into fracking, tobacco and GM food corporations.

The Argus can reveal that the East Sussex Pension Fund, which manages pension contributions for Brighton and Hove City Council and East Sussex County Council, has more than £65 million of its pension portfolio invested in overseas energy companies – including £4.2 million in the world’s largest fracking firm ExxonMobil.

The fund, which also covers East Sussex Fire and Rescue Service, has a further £4.2 million investment in Encana Corp, £3.8 million in Southwestern Energy, £3.6 million in Spectra Energy, £3.21 million in Cenovus Energy, £2.29 million in Noble Energy and £1.3 million in Devon Energy – all leading American fracking companies.

The fund has also ploughed almost £6 million into Imperial Tobacco, responsible for cigarette and tobacco brands such as Lambert and Butler, JPS and Golden Virginia.

It has a further £4.9 million invested in the world’s largest genetically modified (GM) food producer Monsanto – dubbed “America’s third most-hated company” by health campaigners.

Caroline Lucas, MP for Brighton Pavilion, said she had been “lobbying councils for many years” to ensure investments were ethical but government legislation prioritised short-term gains.

Ellie Wyatt, of Frack Free Sussex, said councils should not be investing public money into companies that “damage health and the environment”.

She added: “Last month the British Medical Association voted to divest from the fossil-fuel industry. County councils, especially ones who claim to care about climate change, should be following suit.

“Fracking is a highly controversial issue in Sussex and council authorities should be able to assure their residents that there is no conflict of interest.

‘Unsustainable’ “We urge all council pension stakeholders to question why their pensions are funding fossil fuels, tobacco, mining, deforestation and harmful industries.

“Such industries are increasingly unsustainable in economic terms as well as environmental ones, and they are certainly not ethical investments. Do councillors and the pension beneficiaries want to profit from a lack of ethics, however short term?”

The fund’s joint-largest investment in ExxonMobil – America’s largest oil and gas company – is revealed three months after company bosses agreed to start disclosing risks associated with shale drilling and fracking to their investors following a long-running campaign by shareholders.

The company’s investors’ coalition announced in April that Exxon would be the first company to agree to disclose such risks. The company will publish a report by September that will detail fracking’s potential harm to air quality, water and roads and the risks of chemicals used.

ExxonMobil spokesman Alan Jeffers told Reuters news agency: “We understand people have concerns. This activity is somewhat new and not understood in some parts of the country. People want more information and the more they know, the better.”

However, ExxonMobil CEO Rex Tillerson, who led the company to $9.1 billion first-quarter profits this year, has appeared to show he is in favour of fracking – so long as it is not in his own backyard. In February, the energy chief joined a lawsuit to stop construction of a water tower near his Texas home that would be used in the fracking process to drill for oil.

The East Sussex Pension Fund has also invested interests in Encana Corp, which was last year subject to an investigation after residents in Wyoming claimed their drinking water had been contaminated after the company fracked in the state.

The American Environmental Protection Agency (EPA) concluded that Encana’s activities in the town “may” have tainted the groundwater near the town of Pavillion. But Encana swiftly responded to the report, saying it “strongly disagreed” with its findings and “any potential connection between hydraulic fracturing and Pavillion groundwater quality are conjecture, not factual and only serve to trigger undue alarm.”

EPA refused to have outside experts review its research, prompting Encana – the same company at the centre of the allegations – to provide Wyoming officials with $1.5 million in funding to review the study. Its findings are yet to be published.

Another of the pension fund’s biggest investments is in Monsanto – the world’s biggest manufacturer of genetically modified seeds.

On May 24, a worldwide protest against Monsanto saw more than two million people march in more than 400 different countries – including hundreds in Brighton and Hove – in a bid to stop the company lobbying against GM food labelling laws in America.

The Organic Consumers Association claims that more than 70% of processed foods in the US contain GMO ingredients, yet because Monsanto has “fought hard to prevent labelling laws” in America, this fact is kept from consumers.

Monsanto also produced the Agent Orange herbicide in the 1960s and 1970s – used by the US military in its herbicidal warfare programme in the Vietnam War.

The Vietnam Red Cross reports as many as three million Vietnamese people have been affected by Agent Orange, including at least 150,000 children born with birth defects.

In total, the East Sussex Pension Fund has £859 million in common stock with dozens of companies, including Apple, Microsoft, Tesco, Unilever, and pharmaceutical juggernauts. They form part of the fund’s entire £2.5 billion portfolio – which also includes investments in real estate, cash, gold, bonds and trusts.

Brighton and Hove Green Councillor Ollie Sykes, lead member for finance and resources at Brighton and Hove City Council, also said the Green Party had “lobbied for years” over investments.

He said: “The Greens are one voice on the six-strong investment panel and unfortunately final decisions are taken by fund managers.

“We continue to call for the fund to invest ethically, including looking at investment in infrastructure and services as has happened elsewhere.”

However, Conservative Councillor Andrew Wealls, who sits on the investment fund panel, said: “A Green campaigner’s devil energy company is also powering the heating, cooking, transport and health service needs of their neighbour.

“The scheme invests a substantial proportion of its assets in shares, to deliver enough returns to keep future pensions promises. The scheme currently does not have enough assets to do this so investment return is needed. Legally, we cannot overlay this with an exclusion of various sets of investments.

“What I believe needs to change is the dismal proportion of the fund invested in infrastructure projects.

“So long as we invest on a commercial basis there is nothing to stop the scheme supporting important infrastructure.”

East Sussex Fire and Rescue Service said investment in the local economy would “always be welcome” but ultimately it was a “decision for the fund to take whether to invest in individual local infrastructure projects”.

A spokeswoman for the service said: “East Sussex Fire Authority is legally obliged to offer its eligible employees membership of the Local Government Pension Scheme.

“The authority has no members on the investment panel although it does participate in the annual employers’ meeting. “The authority supports the fund’s current Statement of Investment Principles which requires fund managers to use their influence to encourage companies to adopt best practice in all key areas.”

In West Sussex, The Argus revealed earlier this year that the county council’s pension fund has investments in energy companies Celtique Energie and Cuadrilla, which protesters spent last summer campaigning against when it carried out exploratory drilling for shale gas in Balcombe.

Its fund has invested more than £3 million in Cuadrilla through its UK partner Centrica, which owns British Gas.

The council also admitted to having “very small indirect investments” via private equity managers to Celtique Energie.

However, despite suggestions that the investments could influence planning applications submitted by energy companies, council bosses said each application was decided on “planning grounds and nothing else”.

East Sussex County Council said it was “just the administering authority” of the pension fund and, along with Brighton and Hove City Council, did not wish to comment to The Argus.

Caroline Lucas, MP for Brighton Pavilion, said: “It’s good to see Greens doing all they can locally, but it’s disappointing others on the panel are blocking them.

“I’ve been lobbying the council for many years to ensure investments are ethical. I understand the difficulties caused by current government legislation, which takes a very narrow view of investment returns – by prioritising short-term gains over long-term economic stability.”

Who contributes to the fund?

According to the fund’s latest annual report, more than 70 organisations pay into the pension portfolio.

Some big names include:

Brighton and Hove City Council

East Sussex County Council

East Sussex Fire and Rescue Service

Eastbourne Borough Council

Hastings Borough Council

Lewes District Council

Rother District Council

University of Brighton

Wealden District Council

Bexhill Academy

Brighton Aldridge Community Academy

Glyne Academy

Hailsham Academy

Portslade Aldridge Community Academy

Surrey and Sussex Probation Board

Mears Ltd

Wave Leisure Trust Ltd

Brighton Dome and Festival

Care Quality Commission

Hove & Portslade CAB

Sussex Archaelogical Society

University of Sussex

Bexhill College

Brighton, Hove and Sussex Sixth Form College

City College, Brighton

Plumpton College

Sussex Coast College

Sussex Downs College

Varndean Sixth Form College

Hove & Portslade CAB

Sussex Archaelogical Society

University of Sussex


Politicians who help run the fund

Governance Committee – oversees the management of the fund:

Councillor Peter Jones, Tory, East Sussex County Council Councillor

Jeremy Birch, Labour, East Sussex County Council Councillor

David Elkin, Tory, East Sussex County Council

Councillor Keith Glazier, Tory, East Sussex County Council

Councillor David Tutt, Lib Dem, East Sussex County Council


Investment Panel - responsible for the fund’s investment strategy

Councillor Frank Carstairs, UKIP, East Sussex County Council

Councillor Richard Stogdon, Conservative, East Sussex County Council

Councillor David Tutt, Lib Dem, East Sussex County Council

Councillor Andrew Wealls, Conservative, Brighton and Hove City Council

Councillor Brian Redman, representing the district councils

Councillor Leo Littman, Green, Brighton and Hove City Council