The UK’s largest pension scheme by assets has taken the decision to divest from selected tobacco, coal, and weapons manufacturers after years of demand for this action by its members.
USS, which has more than 400,000 members and manages more than £68 billion, will pull its funds over the next two years from companies in tobacco manufacturing, thermal coal mining (specifically where this makes up more than 25% of revenues), and those involved in the production of cluster munitions (a form of explosive), white phosphorus (a chemical which self-ignites on contact with air) and landmines.
This move comes after a long and at times tense history of member-driven engagement, supported by ShareAction and co-ordinated through Ethics for USS, a group of USS members. The original student-led campaign of that name in the 1990s led USS to become the first major British pension fund to hire a responsible investment team.
Pensions have been highly contentious in the university sector over the last two years with USS at the centre of extended strike action. The new CEO of the USS Investment company, Simon Pilcher, appears now to be open to the types of changes long demanded by scheme members to reflect widely-held ethical preferences of people working and teaching in UK universities and the financial impact of societal pressures to respond to the climate emergency.
Professor Paul Kinnersley, a member of Ethics for USS, recently met with USS and comments: “It is encouraging that USS has taken the decision to exclude tobacco manufacture, thermal coal, cluster bombs and white phosphorus from its investment portfolio. We believe that the overwhelming majority of USS members will support this decision as they do not want their pension contributions invested in sectors which accelerate climate change, kill people or cause harm to them. We will continue to make USS aware of members’ views on the need for further rapid divestment particularly from carbon intensive industries in response to the climate emergency so that they can have a pension scheme that invests ethically and that they can be proud of.”
Dr Sue Blackwell, another member of Ethics for USS, says: “Ethics for USS believes it is high time that USS acknowledged that divestment on ethical grounds by a pension fund is perfectly legal, subject to certain constraints such as consulting the members of the scheme.”
USS currently has £1 billion invested in fossil fuels from which Ethics for USS wants the fund to divest. It also has £400 million invested in tobacco and £200 million in arms manufacturers. USS also faces pressure to divest from students who are not happy that their student fees, which contribute to staff salaries and thus pension contributions, are being used to accelerate climate change. A growing number of universities have already divested their own funds from fossil fuels.
Catherine Howarth, chief executive of ShareAction, says: “After many years of USS closing its ears to members’ views on the scheme’s investments, it seems new leadership at USS is once again listening. This will greatly help to restore trust in USS at a time when it is badly damaged. There is much further to go with this process, and we hope USS will look now to follow other large UK schemes in establishing a robust new approach to regularly ascertain the views of members on investments held for their benefit, building members’ preferences into the scheme’s stewardship policy as well as taking further, bold steps to halt investment in fossil fuels.”
Christine Haswell, UCU National Pensions Official, says: “UCU represents members of USS who work in universities actively working on health and alternative energy among other issues who have been particularly concerned about their pensions being invested in sectors such as tobacco to which they are fundamentally opposed. This move from USS should please all members, many of whom have expressed horror that their pensions were invested in landmines and weapons. Members have indicated that they want pensions invested responsibly and UCU welcome this move as a step to a more ethical scheme.”
Notes to editors:
- For more information, please contact Beau O’Sullivan at email@example.com or +447950 299 490 or Paul Kinnersley at firstname.lastname@example.org or +447840126208
Twitter: @DivestUss | Website: divestuss.org
- Regulations laid in October 2019 explicitly permit UK pension schemes to consider members’ views.
- ShareAction is a campaigning organisation pushing the global investment system to take responsibility for its impacts on people and planet, and use its power to create a green, fair, and healthy society. We want a future where all finance powers social progress. For 15 years, ShareAction has driven responsibility into the heart of mainstream investment through research, campaigning, policy advocacy and public mobilisation. Using our tools and expertise, we influence major investors and the companies they invest in to improve labour standards, tackle the climate crisis and address inequality and public health issues. Visit shareaction.org or follow us @ShareAction to find out more.