Despite the climate emergency, GM Pension Fund made a shocking increase in oil, gas and coal investments last year

Campaign group Fossil Free Greater Manchester (FFGM) has revealed that the Greater Manchester Pension Fund (GMPF) increased its holdings in fossil fuels last year. GMPF has a public  commitment to achieve zero carbon emissions by 2050 and the campaign group, which has called for them to rapidly reduce holdings in fossil fuel companies to achieve this aim, is shocked to see the increase.

The group’s analysis of the pension fund’s recently released 2020 Annual Report reveals that holdings in oil, gas and coal increased between March 2019 and March 2020!  Worse still, GMPF has consistently claimed that its investments in oil, gas and coal bring financial benefit to members but in 2020 its investment  performance was below average for local government pension schemes.

Fossil Free Greater Manchester (FFGM) analysed the holdings at 31 March, 2020 versus 31 March 2019 and concluded that holdings in the oil and gas giants Shell and BP , went up by 27.3% and 18.6%, respectively and Glencore, a commodity trading and mining company whose operations include coal, increased by 42.3%. This contrasts with a claim made by the Fund’s chair, Tameside leader, councillor Brenda Warrington, in the same 2020 Annual Report that GMPF had taken steps to divest from fossil fuel companies.

Fossil Free GM member, Maggie Walker, said

“GMPF’s claims that their pensioners are enjoying higher returns because of their investments in fossil fuels, are not credible.  The climate emergency demands a plan for rapid divestment from companies that continue to extract unnecessary and dangerous fossil fuels. It is shocking to see this increase despite every GM borough having declared a climate emergency”

GMPF have announced a transfer of some investments from “passive” equity funds to a low carbon fund, but campaigners point out that this ignores the direct holdings in fossil fuel companies which are far bigger, and increasing. Maggie said:

“GMPF implies that it has made a divestment of £2.5 billion. Yet as we have shown, this represents only about £100 million of divestment from fossil fuel stocks. This is small in comparison with the Fund’s £860 million of direct shareholdings in oil, gas and coal mining companies.”

 The 2020 Annual Report also reveals that the fund performed badly against other Local Government Pension Schemes (LGPS) in 2019-20, making a loss of 6.6% compared with the average of 4.8%. This continues below average LGPS performance over the  last 15 years.

FFGM point out that other experts such as Mark Carney when Governor of the Bank of England have also advised that holding shares in oil and gas companies is risky. PIRC (Pensions and Investment Research Consultants) concluded that ‘UK equities performed worse than their overseas peers, in part because of the high exposure to oil and gas…’. and the historically cautious International Energy Agency now says that there is no justification for new investment in fossil fuel extraction.

Of the top 20 companies in GMPF’s investment portfolio, five are gas or oil companies. The two biggest are Royal Dutch Shell (£244M) and BP (£235M). GMPF has previously  claimed that its investments in fossil fuels raised an extra £400m but this is also disputed by the campaigners as it is based on a  very selective choice of dates.

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