Increased withdrawal from fossil fuel investments by the local government pension fund
The Wiltshire Pension Fund, a member of the Brunel Pension Partnership pool, has divested from MEG Energy and several other fossil fuel companies, as part of its commitment to reduce carbon emissions. However, the fund's continued investment in Shell presents a significant challenge due to the company's substantial carbon footprint.
Two years ago, the Brunel Pool pledged to divest from fossil fuels by the end of the decade. The divestment from MEG Energy was triggered by the company's oil sands extraction revenues, which equaled or exceeded the 25% threshold set by the Brunel Pool's Activity-Based Exclusions Policy.
Despite pressure from the Wiltshire Pension Fund to divest from Shell, the fund remains invested in the company due to its sizeable carbon footprint, accounting for about 3% of the fund's overall carbon emissions. However, this does not indicate a abandonment of climate commitments, but rather a measured, transition-oriented approach.
Brunel, the fund's investment partner, is engaging with Shell rather than divesting immediately, indicating a strategy of active engagement to drive change. This approach aligns with common practices in responsible investment, where pension funds may retain holdings in large fossil fuel companies during a transition period to advocate for improved sustainability and to manage financial risks associated with sudden divestment.
The Wiltshire Pension Fund has also divested from Prio and Phillips 66, but the reasons for these decisions were not disclosed. The fund's emerging markets manager, Ninety One, has sold its stake in PetroChina, but the reason for the divestment remains undisclosed.
The fund's continued investment in ConocoPhillips, contributing 0.3% to its carbon footprint, is another complex issue. ConocoPhillips ranks better compared to its peers in the World Benchmarking Alliance Oil & Gas Benchmark, and the fund is engaging with the company through to 2025, with the potential for ConocoPhillips to meet CA100+ short-term target criteria.
At this year's Shell AGM, Brunel co-filed a resolution questioning the firm's LNG expansion strategy, underscoring the fund's ongoing engagement with the company. The Wiltshire Pension Fund views Shell as misaligned with its responsible investment policy and has asked Brunel to divest.
In conclusion, the Wiltshire Pension Fund is navigating a delicate balance between its commitment to divest from fossil fuels and its duty to safeguard investment returns and support a transition to lower-carbon energy. The fund's approach to responsible investment, characterized by active engagement and measured divestment, reflects this balancing act.
The Wiltshire Pension Fund, in aligning with the Brunel Pool's pledge to divest from fossil fuels, has also divested from Prio and Phillips 66, but the reasons for these decisions remain undisclosed. However, unlike Shell, the fund's investment in environmental-science companies might be a viable alternative, as such investments could potentially generate both financial returns and contribute to addressing climate-change issues, thereby addressing the fund's responsibility towards business sustainability and finance.
