The £13bn (€17.8bn) Greater Manchester Pension Fund, one of the UK’s largest local government pension funds, is under pressure to change its binding Statement of Investment Principles (SIP) to include a principle to divest from fossil fuels, and to actively invest or divest based on ESG considerations.
A SIP is a legally binding document governing decisions about investments for UK pension schemes. It must be reviewed at least every three years.
The fund is currently consulting on its SIP, and the local branch of the Friends of the Earth is running a campaign urging the fund to change its SIP to allow it to actively divest or invest on ESG considerations, divest from fossil fuels, and invest in renewables.
GMPF’s current SIP states it has a policy of not interfering in the day-to-day decisions of its investment managers; and it does “not actively invest or disinvest from companies solely for social, ethical or environmental reasons”.
In its most recent annual report, the GMPF says it will listen to special interest groups that oppose some of GMPF’s investments, but it adds, “we cannot let this distract from our duty”. As a result it does not have an ethical investment policy and prefers to engage to influence company behaviour.
Speaking to Responsible Investor, Pete Abel, a campaigner from Friends of the Earth said a wider campaign targeting local government pension funds across the UK had been kick-started earlier in Manchester as a result of the SIP consultation.
“The National Friends of the Earth and 350.org are launching a campaign aimed at local authority pensionfunds. When we looked at GMPF we realised it had opened a consultation on its SIP during the holiday season and we had no choice but to pre-empt the campaign.”
GMPF’s consultation ends today, but Manchester Friends of the Earth has already got 400 people to write to the fund since launching the campaign on Monday.
Abel added there was a strong case for the campaign as GMPF had already divested from tobacco, setting a divestment precedent. “It made this decision as public health was placed within the responsibility of the local authority and it contradicted its holdings in tobacco. But recently Public Health England has written a report on the impact of climate change on people’s health. They say they can’t divest from fossil fuels, but there is this precedent with tobacco.”
He also said its support of climate action plans contradicted its heavy holdings in fossil fuels.
GMPF’s most recent annual report lists fossil fuel companies as its top three equity holdings. It has £269m in BP, £261m in Shell and £168m in Rio Tinto.
As well as being one of the UK’s largest local government pension funds, the fund is chaired by Kieran Quinn, who also chairs the Local Authority Pension Fund Forum (LAPFF), the influential shareholder engagement group counting 65 local authority pension funds as members.
All of these members, as well as other local authority pension funds, are set to be subject to a concerted divestment campaign later in the month. To launch the campaign, Fossil Free UK, with 350.org and Friends of the Earth, has collated the fossil fuel holdings of each fund and plans to publish these on the 21st September. Link
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