By Rebecca Warren, ShareAction supporter and member of the LPFA pension fund
15 October 2015
They can see me coming now. This was my third Annual Fund Member Forum of the London Pensions Fund Authority (LPFA), and this time they anticipated my questions.
As part of her main presentation, Susan Martin, the Chief Executive, stated that there was interest among members in the fund’s direct investment in fossil fuels – this was great to hear, and I thank all members who have raised this interest. She told us that the Fund had £42 million directly invested in fossil fuels – less than 1% of their total investments of £4.7 billion (2014 figure) – and £56 million in renewable energy.
But I had been in touch with her regarding these figures before, so I knew that she was talking only about direct investments. After the Forum last year, a few minutes with Trustnet and an Excel spreadsheet (and a geek mentality) were enough for me to determine that they had significantly more exposure to fossil fuels through tracker funds than their direct investments.
The question I had planned to ask was now superseded, so I completely rewrote it, and asked instead:
I was one of the members who raised concern about the fund’s exposure to fossil fuels, and the lack of transparency. I appreciate that you have told us the fund’s direct exposure to fossil fuels is £42 million. But I must bring the topic up again because you need to consider pooled funds also if you (and we) are really going to know the LPFA’s exposure to fossil fuels. Other investors measure their exposure on a look-through basis, so my challenge to LPFA is to calculate total exposure. Then you will be able to reduce it by choosing funds with lower exposure.
Susan replied that this is tricky because the composition of pooled funds changes regularly, but they will rise to the challenge.
I had additionally brought a question from another member, John Merivale, who was unable to attend the Forum. Again, his question had been partially superseded, so I asked the following:
I am concerned about the overall degradation of the natural environment, and I’m keen that my pension fund plays its part in encouraging an economy that works within the limits of natural resources and natural systems.
I am glad to know that the fund recognises the material risk posed by climate change through membership of various collaborative initiatives.
However, I’m keen that my pension also supports industries that combat climate change and build a low carbon economy. I am aware, for example, of Strathclyde Pension Fund investing £10m in a community renewable energy project. And the Environment Agency set and met a target of 25% investment in the green and sustainable economy.
To that end please let me know whether the fund will commit itself to setting and disclosing a target for increased investment in these important sectors over the next 5 years.
This question was answered by the Chairman, Sir Merrick Cockell. He said that they don’t have targets, but, as previously said, they already have £56 million invested. They think renewable energy is a good area to invest in because it produces good returns; they are not doing it out of the goodness of their hearts. A significant complication is that the companies supplying renewable energy are often the fossil fuel companies – this illustrates the importance of positive engagement.
Since the Forum, Jenny Jones, Green Member of the House of Lords, has met with Susan Martin, specifically on the subject of fossil fuel divestment. The LPFA Board would not make any commitment to divestment.
It is a cliché to write “in an ironic twist…” but it is completely appropriate here. In an ironic twist, the inspiring speaker for the Forum was Jan Meek, who walked to the North Pole when in her 60s. A useful symbol as to what we are working towards is that we want it still to be possible to walk to the North Pole when the current generation of children, such as John’s newborn granddaughter, are in their 60s! The LPFA Board refused to be persuaded by a Green Baroness, but will they be persuaded by their members? Let’s keep up the pressure.
Thanks Rebecca! Want to know if your fund meets with members? Email them here.