Managers of the £1.5 trillion invested in Velikobritanii sworkplace pension provision should be given new powers to dumping of shares in oil, gas and coal companies in favor of long-term investments in green and “social impact” opportunities.
The government’s proposals, published on Monday designed to give the Trustees of the Pension Fund more confident to abandon the environmentally harmful fossil fuels and put their money in “green” alternatives if it meets the wishes of its members. Until now, many pension Trustees undermines fiduciary duties, they feel that requires them to seek the best returns despite the threat of climate change.
The new rules, though couched in opaque legalese, not coded go-ahead for pension funds to sell shares in fossil fuels, if they believe that they could become “stranded assets”. This term refers to the coal, oil and gas fields that may not always be monetised as the world moves to a low carbon economy.
In an article published on Monday, clarifying and strengthening Trustees ‘ investment duties, the Department for work and pensions (dwp) said: “the proposed rules are intended to convince the guardians that they can (and should) take into account financially material risks, whether these arise from investment firms, traditional financial reporting, or wider risks covered in non-financial reporting or in other place.”
Environmentalists believe that investments in the amount of trillions of dollars in fossil fuels – coal mines, oil wells, power plants, conventional means – will lose its value when the world is moving decisively to a low carbon economy.
They believe that the fossil fuel reserves and production capacity becomes impaired assets absorbed capital, but may not be used for profit. This bubble of carbon dioxide are estimated at 1 trillion $(£753m) and $4тн, a large chunk of the balance of the global economy.
But the DWP has warned that the new rules do not give carte Blanche to activist groups to intimidate pension funds in the selling of fossil fuels. “These proposals are not directed to any support groups of activists to boycott the elections or to abandon certain assets,” paper DWP said. “The Trustees have priority when making investment decisions and, while they do not necessarily exclude the possibility to take into account the views of member States, they are not required, but main focus is ensuring the return of members.”
Unison, the public sector Union, launched a campaign in January to encourage municipal pension funds, which invested £16 billion in fuel industry – with the aim of getting rid of carbon.
The new rules extend the period of consultation was launched by the Secretary of state for work and pensions, Esther McVey.
“As we see, the younger generation cares more about where their money goes, they often question what their pension is invested in a way that aligns with their values,” she said. “This money can now be used to build a more sustainable, just and equitable society for future generations.”
Fighters against climate change declared that they were delighted with the proposal. Bethan Livesey, head of policy at ShareAction, said: “ShareAction was to insist on changes to these Rules for many years.
“For too long, many of the pension system revealed a little more than vague, high-level statements about their approach to ESG [Environmental, social and governance] factors, and it is unclear what happens behind the scenes.
“Pension schemes can be divided into three camps: those who understand the financial value of taking seriously the ESG factors and to do so, those who say they understand, but do very little, and those who are not in the subject. These provisions should at least enlighten the third group”.
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A growing number of British and European insurance companies have begun to sell holdings in coal companies refusing to insure their operation. More than £15 billion was sold to insurers, including Allianz, Aviva, AXA, & General legal, Swiss re and Zurich over the past two years, according to the coal network, unfriended, a global coalition of NGOs and human rights defenders, including 350.org Greenpeace.
Last week & General said it will participate the China construction Bank, “Rosneft”, the Japanese automotive company Subaru and the five other companies that are unable to act on climate change from the future world Fund.
The family-run Rockefeller Foundation, charitable Foundation of the Rockefeller family who made their fortune from Standard oil, began abandoning fossil fuel enterprise.
However, Cambridge University has just ruled out abandoning of oil and gas in £6.3 bn Fund – despite public Pressure from hundreds of scientists and the hunger strike of three undergraduates. Cambridge said that he had no direct investments in fossil fuel and wanted to avoid any direct investments in coal and tar sand, maintaining indirect investments to a minimum.