The London Borough of Southwark Pension Fund has become the second fund in the UK’s Local Government Pension Scheme (LGPS) to commit to selling off its investments in fossil fuels, following an announcement yesterday.
With £1.2bn (€1.4bn) in assets, the pension fund is the largest in the UK to divest from fossil fuel related investments.
In September, the £735m Waltham Forest Pension Fund said it was committing to divesting from fossil fuels.
The chair of the Southwark pension fund, councillor Fiona Colley, Cabinet member for finance, modernisation and performance, announced the pension fund’s commitment to divesting over time any current investments in fossil fuels, because of growing financial risks.
She also said the fund would look into investing in renewable energy.
Colley said: “The commitment to cut pension investment in fossil fuels long term … is a measured and carefully considered decision based not only on ethical practice and the council’s continued drive to reduce exposure to fossil fuel but also on reducing the financial risk of investing in traditional energy sources, which will ultimately become obsolete.
“The council will explore new opportunities to invest in the development of sustainable energy infrastructure alongside other local authorities, through the London CIV (collective investment vehicle).”
Colley said the council was a long-term investor, aiming to deliver “a truly sustainable pension fund.”
The announcement was made as part of the fund’s new responsible investment principles.
A local campaign group – Fossil Free Southwark – collected around 1,000 signatures on a petition that was presented to the council’s Cabinet.
Tim Gee, a local resident and campaigner, said on behalf of the group: “We warmly welcome these new investments principles that have been endorsed by the Cabinet and hope the Pensions Advisory Panel will put these principles into practice at the earliest opportunity.”
Arabella Advisors, a firm that gives advice on philanthropic matters, said this month that the value of assets behind institutions and individuals that had committed to some kind of divestment from fossil fuel companies had doubled in the last 15 months to $5trn (€4.7trn).
Pension funds and insurance companies now represent the largest sectors committed to divestment, the firm said, adding that this reflected the increased financial and fiduciary risks of holding fossil fuels in a world committed to staying below 2° Celsius.