Councillor Eric Kerry (Con) Chair of the Nottinghamshire County Council Pension Fund
By Anna Whittaker, Local Democracy Reporter
Divesting from fossil fuel companies is a “last resort” – and engaging with them to become greener is the priority, a councillor has said.
The Nottinghamshire County County Council pension fund looks after £6.4bn of retirement pots of 145,000 members including council workers, teachers and the police.
The pension fund has previously come under fire from campaign groups for investing in fossil fuel companies.
Councillor Eric Kerry (Con) Chair of the Nottinghamshire County Council Pension Fund Committee, outlined the thinking behind the authority’s strategy.
He said there is a push for fossil fuel companies to transition to clean energy – but they need the funds and influence of the committee to do this.
He said the Local Authority Pension Fund Forum (LAPFF) also believes that “engagement is key”.
Cllr Kerry added: “We believe that – and divestment is the last resort.”
Climate campaigners Extinction Rebellion have previously called for the committee to stop the “immoral funding” of fossil fuels and divest from certain companies.
As of September 2021, around £170m was invested in energy and fossil fuels companies and £291m in sustainable and renewable companies.
But the council says the energy fossil fuel companies figure is likely to be overstated as this also includes renewable energy companies.
So far, the council has not directly divested from any fossil fuel companies but it has “changed the allocation strategy” to put more money into sustainable investments.
This is something the authority plans to do more of, Cllr Kerry told the Local Democracy Reporting Service.
He said: “By deliberately not investing in some energy companies as they transition, that is reverse greenwashing because we are taking money out of a company which will ultimately provide better environmental results.
“Shell, for example, is now investing in electric pumps on their stations and they will be selling less fuel and more green energy.
“We believe that responsible investment, and that means engaging with all those companies, is the best way of achieving climate change transition.
“BP and Shell are spending the money they earn and putting it into transitioning and we are helping them to fund that.
“We do care about climate change, we also care about several other things like human rights, just transition and people’s standard of living.”
He added that at a recent AGM of the energy firm Xon, the council voted against the board of directors – specifying that they wanted new directors who “specifically understood climate change”.
Cllr Kerry said: “If we can help them to implement a transition plan, we will get 1.5C better than if we sell the company off and let them do whatever they want.
“Our policy is engagement. We want them to transition to clean energy and energy companies have got funds to invest in transition.”
He added that the council has asked LGPS Central – which manages the assets of the Nottinghamshire pension fund – to create a new, sustainable fund with £230m.
The fund will deliver “long term sustainable investments”.
Cllr Kerry added: “We’re not going to do everything overnight, but this is a start.”
Another goal of the fund is to eventually become 100 per cent funded.
Cllr Kerry explained: “We’re still not fully funded, which means we haven’t got the cash in the bank to pay all the expected pensions liabilities for all the decades ahead.
“But we are going in the right direction and we have grown from 87 per cent a few years ago to 93 per cent, virtually in my chairmanship.
“Our strategy is to increase our investment returns so we can claw back to be 100 per cent funded.”
