Fife pension fund vows to step back from fossil fuel investments

The fund responsible for thousands of Fife public sector workers' retirement pots has vowed to avoid making new investments in companies that contribute negatively to climate change.

Thursday, 1st July 2021, 4:10 am

With its new Statement of Responsible Investment Principles, Fife Pension Fund says it will only continue investing in polluting companies that are committed to reducing their impact on the planet.

It has instructed fund managers to assess the carbon being emitted by every single company it invests in - and says it is prepared to pull funding from companies that are unwilling to make changes.

The move is a significant shift in stance for Fife Council which manages the scheme on behalf of several public and third-sector organisations including the council itself, Fife College, local fire and police staff and arms-length bodies such as the Fife Sport and Leisure Trust.

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Fife pension fund  has vowed to avoid making new investments in companies that contribute negatively to climate change.
Fife pension fund has vowed to avoid making new investments in companies that contribute negatively to climate change.

In February, council finance boss Elaine Muir said that the authority was committed to a "balance between maximising investment income and ethical investment" - but stopped short of committing to reviewing the Pension Fund's portfolio at the time.

On Tuesday, Ms Muir said the fund was now dedicated to the United Nations' six established Principles for Responsible Investment, which recommend that funds invest responsibly in firms with clear "ESG" standards, covering environmental, societal and governance practices.

She told the council's pensions committee: "This is really a starting point for us here in Fife. There are some aspects we're already delivering but there's aspirations in there that will need some work.

"When we come back [to this] in a year I anticipate we will have made good progress in delivering on some of this.

Fife pension fund says it will avoid new investments in companies that contribute negatively to climate change.

"I hope the committee agrees that on seeing the ambitions in the report is a positive step - but that there is a lot to be done to deliver on some of this."

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Fife is not officially signed up to the UN's investment accords, but has agreed to follow them closely as it carves out a more sustainable investment strategy that is good for the planet - and the thousands of public and third sector employees who entrust it with their retirement savings.

Under the newly agreed plan, Fife Pension Fund will make no new investments in companies that are not aligned with the goals of the Paris climate agreement, an internationally recognised commitment to prevent average global temperatures from rising more than 2C.

Fund managers will use track how companies are doing using the Transition Pathway Initiative, a global tool that examines companies in polluting industries such as oil and gas, aviation and car production. It assigns them a score based on how prepared they are to go green and whether they are in tune with the Paris accords.

Selling off stocks - or "divesting" - is not a core part of Fund's plan. However, the strategy does accommodate it as a last resort option if companies that it invests in are unwilling to make changes benefitting the environment.

Proponents for divestment claim that it is in the best interests of those whose money is held by the fund, as its value could drop as fossil fuels go out of fashion.

However, the fund's current stance is to use its shares as leverage to influence companies into making greener decisions.

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