A CAMPAIGN group has called for East Sussex County Council to “stop funding climate change” by divesting their £70 million Pension Fund investment in fossil fuel companies.

Divest East Sussex said East Sussex Pension Fund (ESPF) needs to follow suit of other local councils who have divested their investment into companies who are continuing to search for new oil fields around the world.

This comes after Councillor Gerard Fox, chairman of ESPF, said they have “not set any time limits relating to companies’ exploration for oil” after questions from 88 members of the public across Sussex.

He stated this is because ESPF does not directly invest in any company, so setting time limits on companies by the Fund is not something they can act upon.

Divest East Sussex Funds

Divest East Sussex Funds

Divest East Sussex have argued that it can be done as other councils have managed to fully divest funds - such as Waltham Forest in London and Oxford City Council, as well as other councils who have partially divested funds such as the South Yorkshire Pension Fund.

Gabriel Carlyle, a spokesman for Divest East Sussex, said: “By continuing to invest local people’s pensions in the oil giants like Shell and BP that refuse to stop approving new oil extraction projects, ESPF and East Sussex County Council are helping to make it impossible for the world to limit global warming to 1.5°C.

“We know at the moment that if you burn all the oil and gas in the existing reserves, it will push us up 1.5 degrees, so it will make catastrophic climate change inevitable.

“It’s fairly clear that we shouldn’t be prospecting for new reserves and approving new extraction projects, that is just making the problem worse.”

Mr Carlyle said that councils need to not only stop investment in fossil fuels but say why they are doing it.

The East Sussex Local Government Pension Scheme is administered by East Sussex County Council. The scheme provides retirement benefits for East Sussex County Council employees, employees of Brighton and Hove City Council, as well as the five borough and district councils, academies, universities, colleges, public authorities and staff transferred to admitted bodies. There are currently around 130 employers within the Fund and almost 78,000 members.

Mr Carlyle added: “By doing that, institutions change the political narrative, and they undermine the power of the fossil fuel industry.

“What we need is for institutions like East Sussex County Council to take a stand. It is the right thing for them to do financially for their pension fund members, but it’s also the right thing for them to do if they don’t want to have a world where we have two or three degrees of global warming.

“It is going to be terrible for the pension fund as well, it’s not like ESPF is going to be insulated from the effects of climate change."

A spokesperson for ESPF told the Argus that the Fund invests into the index as a whole rather than directly into any company, so cannot divest directly from individual companies.

They also said the fund can use the weight of all their investors’ money to hold companies to account by voting against a variety of resolutions if there are concerns with the direction and management of fossil fuel companies.

ESPF’s spokesman said: “The passive and active fund managers can and do vote at company annual general meetings using the weight of all their investors’ money to vote against resolutions such as climate transition plans, renumeration and re-election of directors where there are concerns with the direction and management of a company.

“In addition, they can actively engage with these companies; for example in the last quarter of 2020 the Fund’s passive manager met with the head of sustainability at Equinor to follow up on recent climate ambitions announced.”

ESPF stated that they are part of two different engagement groups, the Local Authority Pension Fund Forum (LAPFF) and the Institutional Investors Group on Climate Change (IIGCC), who take the collective value of all members’ assets and use that to drive changes forwards with companies on environmental, social and governance issues.

They added: “With members’ assets of over £300 billion, LAPFF presses companies on aligning their business models with a 1.5 degree scenario and pushes for an orderly net-zero carbon transition; LAPFF engaged with 145 companies in the last quarter of 2020.”

ESPF have stated before that they have a policy of “engagement, not divestment”, with Councillor Gerard Fox saying on March 23 that divestment is a last resort in an escalation process of engagement with fossil fuel companies.

ESPF’s spokesman added: “As the Fund is only a unit holder in pooled funds and not a direct investor it cannot divest from a company itself, but it can choose which funds to invest in; for example none of the Fund’s active equity managers hold investments in fossil fuel companies and the two newer funds actively invest in sustainable solutions to the climate crisis.

“In addition, the Fund’s new passive manager is not a traditional passive manager; instead it screens out companies that fail to meet its required standard focusing on a long term alignment to the Paris Agreement, and as a result there are a number of fossil fuel companies explicitly listed on the exclusion list.”

ESPF has been reducing the share of its portfolio invested in fossil fuel companies steadily since 2015. They have reduced this from 6.6 per cent of their portfolio, to 1.9 per cent as of December 31 2020, which equates to £75 million still invested in fossil fuel companies.