The recent announcement by RCT and WLGA Council Leader Andrew Morgan of his intention to work to reduce and ultimately remove – sooner rather than later – fossil fuels from the investment portfolio of RCT’s pension funds is hugely welcome. This stance has also been publicly backed by council Leader Huw David, as Bridgend shares the pension fund with RCT and Merthyr.
Why is this important?
Leadership on climate change and decarbonisation goes deep into every aspect of our lives.
It’s not just the things we do individually though those are truly important: the way we holiday (like cutting down on those travel emissions) and what we consume (like lower carbon-miles, food and reusing and recycling) and the way we get around locally (like walking and cycling if we can) and so many more choices in our everyday lives. They all matter, and whilst none of us are saints we can all make a difference.
It’s not just the grand occasions of international diplomacy – successful or otherwise – like the UN COP26 in Glasgow. Though heaven knows unless the nations of the world get their act together decisively and urgently then we will never be forgiven.
Sometimes it’s the mundane but powerful things like pensions. Yes, boring, yawn-inducing pensions! Like most people, we tend not to think about pensions much on a daily basis, unless we are approaching retirement. They are things we put money into, stuff the pension paperwork deep into a cupboard draw (okay, I know you all do it on-line nowadays!) and then forget about it.
But pensions are hugely powerful instruments in the drive towards decarbonisation. For too long, the hyper-investment by pension funds in lucrative fossil fuels has not only driven pension dividends but has propelled carbon emissions upwards by incentivising greater and greater investment in increasingly damaging exploitation of fossil fuels (and in increasingly fragile parts of the world). So workers are inadvertently and unknowingly fuelling the climate crisis and damaging the planet, because of the pension choices being made in their names.
Yet it’s fascinating – and reassuring – that pension funds investors are finding that divesting from fossil fuels has a neutral or slight positive affect on the value of pensions. So in divesting away from fossil fuels you and I do not lose out and – even more importantly – the planet and our children and grandchildren win! Moreover, pension fund managers are increasingly seeing declining returns on investment in fossil fuels anyway. There are better investments to protect our future pensions, and to protect the environment.
So, to see the leadership by council leaders like Andrew Morgan and Huw David is truly welcome. They’ve understood the importance of looking after the pension value of their workers, but also looking after the planet for the coming generations. It is far-sighted, and in-line with Wales “well-being of future generations” approach. It echoes the approach increasing numbers of Welsh local authorities, though we need to get that message to ALL our local authorities in Wales.
It also echoes the leadership shown in the Senedd pension scheme when in 2020 it announced a divestment strategy couple with new investment into a Sustainable Return Fund. If pension funds historically have boosted investment in fossil fuels and driven climate change and global heating, now they can help reverse this and focus on truly sustainable investment.
Change like this does not happen without public pressure, long-running campaigns, and people and organisations who counter the well-funded misinformation of the fossil-fuel lobby with evidence-based arguments of why the change is urgently needed (and why pensions will prosper with a more sustainable investment portfolio).
It also takes real leadership on the ground from pension funds, and from council leaders and the Senedd and others to make the change.
Who said pensions are boring? They could help save the planet.