The city that will host an international climate conference later this year, will invest hundreds of millions of pounds in fossil fuels indefinitely under a new policy, environmental campaigners said today.

Glasgow City Council, which runs the Strathclyde Pension Fund, was asked to establish a plan to divest from fossil fuel companies before the COP26 UN climate summit to be hosted in the city in November.

But the new policy, set out in a report to be discussed this week, has been criticised by the Scottish divestment campaign as “morally repugnant” and “banking on the failure of the summit”.

Unless councillors called for action, campaigners said, investment in companies linked to fossil fuels would continue.

Analysis by Friends of the Earth Scotland estimated that the Strathclyde Pension Fund invests more than £836 million in fossil fuel companies. The fund’s own estimate is that oil and gas investments are worth £316 million.

Even the lower figure is the largest investment in climate polluters of any public fund in Scotland, Friends of the Earth Scotland said.

The report on divestment, to be discussed on Wednesday at the Pension Committee’s final meeting before COP26, includes a suggestion for a traffic light system.

This would rate companies red, amber and green on their climate actions. Firms with a red rating, which could not, or would not adapt, would see a decision to disinvest.

But the report said most of the current holdings would be in the green and amber categories and investment would continue with most companies.

The report recommended “minimum standards” for investment. But it also stressed the importance of engagement with companies, rather than exclusion.

Friends of the Earth Scotland and Divest Strathclyde outlined several problems with the new proposals:

• Bar for continued investment in climate polluters is so low that most major oil companies would likely be retained
• No requirement to adhere to either the UN Paris Treaty target to limit global heating to 1.5° or to the City Council’s own climate emergency plan
• No reference to specific figures, timescales, or deadlines, making it easy for companies to obfuscate to avoid divestment
• No timescale for full adoption of the policy

Ric Lander, divestment campaigner at Friends of the Earth Scotland, said:

“Fund members, community activists and the City Council have demanded the Strathclyde Pension Fund come up with a plan to divest from disastrous fossil fuel companies. Now it seems they’ve instead come up with a plan to carry on with business as usual.

“Continuing to invest hundreds of millions in climate polluters is financial folly and morally repugnant. Fossil fuel companies can’t survive if we succeed in building a sustainable future. That also means that, unless this policy is radically altered, Glasgow will host the world’s climate crisis talks knowing it’s pension fund is banking on their failure.

“City Councillors do have the power to change course and invest sustainably. When the Pension Fund Committee scrutinises this proposal on Wednesday they should ask how the policy can be turned into something effective and meaningful, a contribution to climate action that Glasgow could be proud of.”

Isla Scott, of Divest Strathclyde said:

“We are frankly aghast that Strathclyde Pension Fund is still happy to pour hundreds of millions into financing the very companies who are driving the climate crisis and who are getting away with murder. 

“After years of the policy of ‘engagement’ practiced by the Fund, it is clear that this has made very little if any difference to the fossil fuel companies, who are even now planning to maximise the production of oil and gas in many places around the world while greenwashing their continued pollution and lobbying governments to prevent climate action.

“We want to see SPF put in place a real policy that will ensure they divest from these climate-destroying companies and reinvest in a sustainable future. We’ll be watching and holding them to account to make sure they don’t get away with this greenwashing.”

A spokesperson for Strathclyde Pension Fund said:

“It’s welcome that campaigners recognise that our direct investments in industries like oil and gas are already decreasing. They are also dwarfed by our investments in clean, renewable energy.

“Meanwhile, the fund’s exposure to oil and gas is less than half of what it was just five years ago, in terms of a percentage of our passive equity – and closing in on a two-thirds reduction in terms of the overall value of the fund.

“Strathclyde Pension Fund is one of the first large pension funds to approve divestment as a tool to address firms that do not engage with the climate crisis.”

Update

On 8 September 2021, Glasgow City Council’s pensions committee approved the new investment policy.

Stephen Smellie, deputy convenor of Unison Scotland, said:

“The host city for COP26 had the chance to become an international leader in green pensions, but they have sadly fallen short. Given the climate emergency we face, the proposals are too slow, too timid and the soft questions being asked will allow carbon investments to be concealed.”

Divest Strathclyde said:

“We are frankly aghast that Strathclyde Pension Fund is still happy to pour hundreds of millions into financing the very companies who are driving the climate crisis and who are getting away with murder.  After years of the policy of engagement practiced by the fund, it is clear that this has made very little if any difference to the fossil fuel companies, who are now even planning to maximise the production of oil and gas in many places around the world while greenwashing their continued pollution and lobbying governments to prevent climate action.”

Ruth Hayhurst will be reporting from COP26 for DrillOrDrop