Gloucestershire County Council is considering moving its existing fossil fuel commitments into responsible investment funds, which could result in a £3.8m loss for the authority.
In 2019, Gloucestershire council implemented a Responsible Investment Policy (RI policy), which prohibited the authority from making new commitments to pooled funds that invest in fossil fuel companies. However, at the time, Gloucestershire acknowledged that its fund investments made prior to the policy implementation could contain a “small percentage” of fossil fuel holdings.
Following the authority’s budget setting for 2024/25, the council has produced a report assessing the consequences of moving its existing fossil fuel holdings into “greener investments”.
The report, which was presented to Gloucestershire’s Audit and Governance Committee last week, revealed that if the council were to divest from its funds with fossil fuel exposure, the move would crystalise a capital loss of over £3.8m.
According to the report, the council has exposure to fossil fuels through four funds managed by Aegon, Columbia Threadneedle, Ninety One and Schroders.
Green fund alternatives?
The report also noted that it will be challenging for the council to re-invest the capital from fossil fuel divestment into green fund alternatives, due to the “limited number of options available”.
Other options available to the council include general investments in supranational bonds. Despite these commitments not being specifically green investments, some institutions offer sustainability-linked bonds, the report explained.
Gloucestershire currently invests in two green responsible investment funds, which are managed by Rathbones and BMO, moves which were made following the implementation of its RI policy.
However, the report estimated that increasing Gloucestershire’s commitments to “greener funds” such as these could result in up to £199,000 loss of revenue income per annum for the authority.
—————
FREE bi-weekly newsletters
Subscribe to Room151 Newsletters
Follow us on LinkedIn
Follow us here
Monthly Online Treasury Briefing
Sign up here with a .gov.uk email address
Room151 Webinars
Visit the Room151 channel
