Surrey Pension Act Now
The Surrey Pension Fund (SPF) holds £151m investment in fossil fuels. There is now a clear moral and financial obligation to divest these funds from the companies that are driving the climate and ecological crisis. By refusing to divest these assets the SPF committee is jeopardising the futures and retirement plans of thousands of hard working Surrey locals.
As Mark Carney, the former governor of the Bank Of England has warned, these assets risk becoming 'stranded' as the world transitions away from fossil fuels to a low carbon economy. The pension committee's fiduciary duty means they should now be acting to move all funds into Paris Agreement compliant schemes. Yet the SPF committee refuses to put our futures before profit, claiming “Holding zero fossil fuel investments in the Fund’s portfolio has no impact whatsoever in reducing the impact of climate change”
The situation is now urgent. The United Nations and the scientific community are warning us that by 2030 we will pass the tipping points at which climate breakdown becomes irreversible. We must make an immediate, managed transition away from fossil fuels, to secure our futures, the livelihoods of the thousands of employees in the oil & gas industry, and the vulnerable communities on the front line of climate change in the global south. One immediate step is to remove investment from the companies driving this crisis.
We are campaigning to ensure Surrey residents' hard earned money is not used to fund planetary destruction. To launch this campaign, we have sent the SPF committee the below open letter, laying out the moral and financial obligations of divestment, co-signed by Extinction Rebellion Surrey, Friends Of The Earth, The Campaign Against Climate Change, and a host of other Surrey organisations. To add your voice to our call to divest please email us at . We can only tackle the climate emergency by standing united and refusing to allow our elected officials to put profit before our futures.
Surrey Pension Fund Committee
Kingston upon Thames
2nd March 2020
Dear Members of the Surrey Pension Fund Committee,
We write as local residents concerned about the Surrey Pension Fund’s investments in fossil fuels. The fund held £151 million in fossil fuel investments on 31 May 2019.
We ask the Committee to fully divest from fossil fuel investments by the end of 2020.
It is widely understood that burning coal, oil and gas is the single largest contributor to human induced climate change. We must rapidly shift energy consumption away from fossil fuels to renewable energy to prevent the catastrophic destabilisation of our climate and the consequent environmental, economic and societal collapse that will follow if we do not. By investing employee and taxpayer funds in fossil fuels, the Pension Fund is financing this oncoming destruction. This is not in our interest and cannot be right.
In addition to the moral imperative to divest, the financial risks of failing to do so are significant.
Holding the global temperature increase well below 2.0 degrees centigrade as per the Paris Agreement requires strictly limiting the remaining global carbon budget. This rapid elimination of greenhouse gas emissions will require an unprecedented transformation of the economy and has clear implications for the financial viability of today’s investments. Mark Carney has recently warned that staying within the carbon budget “would render the vast majority of reserves ‘stranded’ – oil, gas and coal will be literally unburnable”… “Climate breakdown could render investments held by millions of people worthless.” A Cambridge University study in 2018 estimated the loss from stranded fossil fuel assets would amount to US$1-4 trillion.
An ever-growing list of organisations, including many pension funds such as Cardiff Council, Environment Agency, London Boroughs of Hackney, Southwark and Waltham Forest have made divestment commitments. Last year the world’s biggest sovereign wealth fund – Norway’s Government Pension Fund Global – made the decision to divest US$13bn from coal and oil companies.
Surrey Pension Fund must not be left behind. As fiduciaries, the SPF Committee Members would be negligent in understating the financial risk of continuing to invest in fossil fuels.
Furthermore, we urge that funds currently invested in fossil fuels be re-directed to renewable energy and other Paris Agreement compliant investments, thereby contributing to the transition to a low-carbon economy whilst protecting its members’ future income and avoiding the need for taxpayers to top up the fund. Oil and gas stocks have already been underperforming the broad market over 5 and 10 years while cleantech stocks have been beating it.
Engagement with fossil fuel companies is not enough.
Engagement between shareholders and companies is an important tool to encourage companies, as energy users, to adapt their businesses to a carbon free future. But engagement is not effective at changing the core business model of a company, as is required with oil, gas and coal companies. Years of shareholder engagement has failed to make fossil fuel companies switch their business models away from fossil fuels. Indeed, to date oil and gas companies have invested less than 1% of total capital expenditure outside of their core business.
Act now to avoid undue taxpayer costs, as you safeguard your employees’ future.
Not divesting now means running serious and completely avoidable risks of financial loss for SPF. Every day the fund delays making the decision to get out of fossil fuels completely, you increase the risks of falling asset prices and lower returns for the Pension Fund. In short, divestment is essential – for protection of taxpayers and the scheme’s members, as well as for tackling the climate crisis. Divest now and show us that you care about our future.
We the undersigned:
Representing: XR Guildford, XR Godalming, XR Dorking, XR Woking, XR Elmbridge,
XR Staines, XR Uni of Surrey XR Epsom & Ewell, XR Farnham, XR Reigate & Redhill
Professor Tim Jackson
Director, Centre For The Understanding
Of Sustainable Prosperity
Guildford Environmental Forum
South West Surrey
1. Mark Carney – BBC Interview 30 December 2019 https://www.bbc.co.uk/news/business-50868717
2. Macroeconomic impact of Stranded Fuel Assets https://www.nature.com/articles/s41558-018-0182-1
4. According to the MSCI World index, MSCI World Energy Index and the Bloomberg Cleantech index