An attempt by the West of England metro mayor to force Avon Pension Fund to divest entirely from fossil fuels and become carbon neutral by 2030 has failed after two council leaders were unable to vote.
Dan Norris’s motion could not be proposed as planned at a meeting of the West of England Combined Authority (WECA) on 1 July as the two leaders’ membership of the fund meant they had to declare a conflict of interest and leave the room. As a result, the meeting was inquorate.
The wording of the motion Norris proposed stated: “In light of the climate emergency and the West of England’s 2030 net-zero target, WECA calls on the Avon Pension Fund to match this ambition by committing to having a carbon-neutral pension fund by 2030 or earlier; and to divest entirely from fossil fuel stocks.”
Norris told Room151 that he was “currently exploring all methods to ensure that Avon Pension Fund does divest away from fossil fuels”.
He added: “The people of the West of England are ahead of politicians on the climate crisis, which is why I remain determined to make progress on this, and won’t stop until the Avon Pension Fund steps up and matches our own ambitions when it comes to carbon neutrality and divesting from dirty fossil fuels.”
Delivering net zero by 2030 is not feasible, as it would require a highly concentrated investment strategy, which would expose the fund to significant financial risk given the limited investable solutions currently available today.
Unfeasible target
In response to the proposal, Avon Pension Fund said it was supportive of the broader 2030 net-zero ambitions of councils in the area, but the target was not “feasible” at the moment as it would put its fiduciary duties at risk.
Liz Woodyard, group manager, funding, investment and risk at Avon Pension Fund, told Room151: “Whilst we are already making good progress against our targets, delivering net zero by 2030 is not feasible as its stands today, as it would require a highly concentrated investment strategy, which would expose the fund to significant financial risk given the limited investable solutions currently available today.
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“This would put in significant jeopardy our overriding objective of paying pensions to members as they fall due.”
Avon Pension Fund has total assets valued at £5.8bn and is part of the Brunel Pension Partnership, which is one of the eight UK Local Government Pension Scheme pools.
The fund said it was currently on track to meet its targets, which are to reduce absolute emissions in its equity portfolio by 43% by 2025 and 69% by 2030 (compared to its 2020 baseline).
Some of the large fossil fuel companies are some of the biggest and heaviest investors in green energy at the moment. When do you make the decision that they have crossed the Rubicon?
Renewable energy infrastructure
Woodyard added: “We are also investing £380m in renewable energy infrastructure and enabling technologies. Also, £1.4bn is currently invested in sustainable companies and those that are aligning or adapting to a net-zero trajectory.”
She said that just 1.4% of the total fund is invested in companies that derive some proportion of revenues from either fossil fuel extraction or power generated from non-renewable consumption. This also includes companies that have revenue streams from renewable resources.
In the WECA committee meeting, members of the authority’s overview and scrutiny committee were not convinced that the combined authority could completely divest from companies associated with fossil fuels.
Cllr Winston Duguid, chairman of the WECA overview and scrutiny committee, said at the meeting: “In this ever-changing, fast-changing field some of the large fossil fuel companies are some of the biggest and heaviest investors in green energy at the moment. When do you make the decision that they have crossed the Rubicon?”
He highlighted that BP was the largest solar power company in Europe despite being one of the world’s seven oil and gas “supermajors”.
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