British MPs' pension fund cuts fossil fuel investments

The Parliamentary Contributory Pension Fund (PCPF) has announced that it is reducing its investment in fossil fuels and increasing its exposure to renewable energy.

As reported by our sister title, Pensions Age, its 2019 Annual Review revealed that the trustees have committed 5 per cent of scheme assets to a BlackRock Global Renewable Infrastructure strategy and agreed to allocate 30 per cent of the existing equity structure to a global sustainable multi-factor equity with Schroders.

However, the report also showed that the £733m scheme still has £8m invested in Royal Dutch Shell and £4.4m in BP.

In response to the report, MPs from the cross-part Divest Parliament initiative again called on the trustees to end investments in fossil fuels and align the PCPF with the government’s climate action targets.

MP for Brighton Pavilion, Caroline Lucas, said: “Investing in clean energy is clearly the right thing to do, financially and for the future of our planet, so I’m glad the Parliamentary Pension Fund is doing this. But it has to also stop investing in Shell and BP.

“Parliament declared a climate emergency nearly a year ago, and the Parliamentary Pension Fund needs to fall into line with this by ending the support for fossil fuels.

“These investments cannot be justified on ethical, environmental or financial grounds, and they undermine MPs’ credibility in addressing the climate emergency. They have to stop.”

In October 2020, 330 current and former MPs signed a petition calling on the trustees to completely divest from fossil fuels. The initiative is now made up of 360 MPs.

Compared to the scheme’s 2018 report, the investment in BP has decreased by 62 per cent and investment in Royal Dutch Shell has fallen by 26 per cent.

Commenting within the report, PCPF chair of the trustees, Sir Brian Donohoe, said: “We continue to focus on investment matters at our meetings and I am pleased to report that the fund returned 7.4 per cent during the year ending 31 March 2019 which was ahead of our target. The outperformance was largely as a result of strong returns from equity markets.

“We are ever increasingly focussed not just on investments, but on responsible investment, as owners of the assets of the fund.

“During the year, changes to pension legislation meant that pension fund trustees were required to update the fund’s Statement of Investment Principles to address all financially material considerations, which included environmental, social and governance (ESG) and climate change risks.”

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