Fife Council urged to shift pension fund from firms which fail to go green
Fife Pension Fund should still look to divest from fossil fuel firms if they fail to go green, a councillor has said - as it was revealed that the Kingdom used its influence to put eco-minded members on the board of oil giant ExxonMobil.
Inverkeithing and Dalgety Bay SNP councillor David Barratt is leading on a campaign to purge Fife Pension Fund of assets that are contributing to climate change.
However, he has broadly welcomed the fund's more diplomatic Statement of Responsible Investment Principles, which commits the company to being active in the polluting companies it continues investing in.
The new manifesto commits Fife Pension Fund - managed by Fife Council on behalf of several local employers - to reviewing its investments to ensure they are not directly or indirectly contributing to rising global temperatures.
The masterplan also includes a pledge not to make any new investments in firms that may be contributing adversely to climate change.
Cllr Barratt said: "I hope that divestment will play a part in future policy but setting environmental and social principles for our fund managers is also important.
"This includes being active shareholders by voting to better align company activities with our values."
Fife Pension Fund has demonstrated its active involvement in polluting firms as recently as May.
It has emerged that its shares, alongside those of Lothian Pension Fund, were used to install new environmentally aware members on the board of oil and gas giant ExxonMobil which operates the Fife Ethylene Plant plant at Mossmorran in Cowdenbeath.
Through investment managers EOS at Federated Hermes, both funds submitted support for the candidates of Engine No. 1 to join the Exxon board. EN1 is an activist hedge fund seeking to promote positive action on climate change by putting fervent environmentalists on the boards of polluting firms.
David Hickey, Lothian's responsible investment lead and an architect of Fife's new responsible investment principles, said Exxon has been "slow to respond to the challenges of the energy transition" and that the new board members would help to "reshape" the energy firm in the decades ahead.
However, Barratt - who last month successfully pushed for a report assessing the impact of total or partial divestment of the estimated £70 million in shares Fife holds in highly polluting industries - says selling off shares must remain on the table as an option.
He added: "I'm pleased that Fife Pension Fund shares contributed to that success story [at ExxonMobil].
"But it would be niave to think that that is enough to address the investment risks associated with investing in fossil fuels, or that this is enough to change the behaviour of a company who actively undermine climate science and lobby against government action on climate change."
Pursuing a greener agenda will likely lead to clashes between Fife Pension Fund's committee and local employers such as ExxonMobil, which says around 180 jobs are directly dependent on Mossmorran, and Shell, which operates the adjoining Mossmorran Natural Gas Plant.
Last month Leven, Kennoway and Largo councillor Colin Davidson warned that the fund could be making a rod for its own back by divesting from companies that support Fife's economy.
He said: "We're encouraging companies to come to this area and invest in oil and gas, yet we're looking at divestment."
However, with companies such as BP, Shell and Total committing to net-zero by 2050 and examining greener ways of producing energy, ExxonMobil could soon become an outlier in its attitude towards change.
The firm is yet to commit to a net-zero policy.
And while it has pledged to reduce carbon emissions by 30% by 2025 in its "upstream" business - the side of the firm that extracts fossil fuels from the earth - it is yet to extend that promise to its "Scope 3" emissions, which stem from the indirect use of its products.
The firm apologised last week after Keith McCoy, a senior lobbyist with the firm in the United States, was secretly filmed claiming the company was waging war on climate change legislation.
Chief executive and chairman Darren W. Woods said the firm wanted to be "part of the solution while responsibly providing affordable energy", while McCoy later apologised on business social network LinkedIn.