SCC Pension Fund Chair Fends Off ‘Told You So’ Critics of £74m Drop in Fossil Fuel Assets

Published on: 9 Oct, 2020
Updated on: 10 Oct, 2020

An Extinction Rebellion activist representing Earth hands Surrey Pension Fund committee a black flower to represent death, at their March 2020 meeting. Photo XR Surrey Press

By Julie Armstrong

local democracy reporter

Hundreds of campaigners are again calling on the county council’s Surrey Pension Fund to sell all their oil, gas and coal investments to protect pensions and the planet.

In May this year, the fund had assets worth £77 million invested in fossil fuels, mostly BP and Shell. Three months earlier, in an open letter from 14 county-wide organisations, including Extinction Rebellion, Friends of the Earth and Frack Free Surrey, they had been urged to sell these holdings.

Last May, the holdings had been assessed at £151 million.

This week, BP and Shell share prices are down to levels not seen since 1995, and more than 630 people have signed a petition demanding the fund committee takes notice.

Nearly 300 employers make up the fund, part of the national Local Government Pension Scheme, including the county council (SCC), Surrey Police, borough, district and parish councils, scores of schools and colleges and the university.

Jenny Condit, an Extinction Rebellion member from Haslemere, said: “Owning shares is not only a financial activity. When you own shares in a company, you own part of the company, actively supporting the activities of that company.

“We now know the activities of fossil fuel companies are the single greatest contributor to climate breakdown. Why would we want our money to be used to damage our environment?”

Ms Condit, a former senior investment banker at JP Morgan Securities, said she believed many taxpayers would be shocked to learn what their money was being invested in, adding that she saw this as a financial as well as a moral case.

“Fossil fuel share prices have been falling for years,” she said. “And now, in the past few months, fossil fuel companies have slashed tens of billions off their balance sheets in recognition of their permanent reduction in value.”

Whether the drop of £74 million in the fund’s fossil fuel shares from May, 2019, is due to trading or to the collapse in oil share prices is unclear.

Surrey resident Simon Hallett had asked the fund committee, and got a written response saying this was “not something he Fund views as a relevant area of work to commission internally or externally”.

Mr Hallett asked September’s SCC committee meeting: “Do you dispute that the value lost from holding your fossil fuel companies over the past year was, to be cautious, at least £50m?

“And can you confirm that you still consider this predictable and predicted loss to be, I quote, ‘not relevant’?”

Spelthorne Cllr Tim Evans, chair of the committee, said: “You could say that if we were talking about Marks and Spencer or any other company. We do allow our investment managers to make these decisions in accordance with the agreements that we’ve given them.

“Your numbers may be right. I don’t think it matters particularly whether they are or not, but after a huge fall in the market as you know with Covid, the markets have come back up again as they duly do.

“Oil prices are extremely low which is part of the fall of the value of those things, maybe they will change, who knows?

“We leave those decisions to the investment managers and they have made them.”

Mr Hallett responded: “It’s not Marks and Spencer, is it? It’s a systematic risk from a factor, energy, which was identified and that risk has come to pass.”

Petitioner Steve McDonald said: “This is almost beyond belief. This loss was wholly avoidable.

“The chair might dismiss £50m but what might that money mean to Surrey residents? For example, it could have reversed the past 10 years of cuts to the council’s schools and children’s budget, twice over.”

In July 2019, when Mark Carney was the Bank of England governor, he told Channel 4 News that companies which did not adapt to the risks of climate change and “move capital from where it is today to where it needs to be tomorrow” would “go bankrupt without question”.

After the meeting, Cllr Evans (Con, Lower Sunbury & Halliford), said: “The Surrey fund, along with pension funds, individuals, assets managers and markets in general were adversely affected by the Covid-19 pandemic which did see the value of the Surrey fund drop to as low as circa £3.8 billion. It is pleasing to note this has now recovered to circa £4.3 billion.

“While markets do fluctuate, there has been no adverse impact on the long-term funding position of the Surrey fund or the associated employer-contribution rates.”

Lib Dem leader Sir Ed Davey, who last year urged the government to change the regulations affecting pension funds and require them to take into account the risk of climate change, told SurreyLive: “Pension funds should not be investing in fossil fuels, full stop.

“Pension trustees are supposed to take into account interests of the beneficiaries. How can you be doing this if you’re investing in industries that are polluting our planet and threatening our future?”

The petition can be viewed here: https://campaigns.gofossilfree.org/petitions/divestsurrey

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