The United Kingdom’s biggest pension fund is banning investments in tar sands/oil sands, Arctic drilling, and coal projects—against the wishes of the country’s current pensions minister.
The nine-million-member National Employment Savings Trust (Nest) “will shift £5.5 billion into ‘climate aware’ investments as it anticipates a green economic recovery from coronavirus,” The Guardian reports, in a post republished by the Institute for Energy Economics and Financial Analysis. The government-backed fund has a major hand in investing workers’ retirement savings under the country’s auto-enrolment plan.
The announcement raised the ire of pensions minister Guy Opperman, who declared divestment “counterproductive” earlier this month. UK campaigners lauded the move as a landmark for the pensions industry.
“The ban will mean that some of the world’s biggest mining companies, such as BHP, can never be part of Nest’s share holdings, as long they derive profits from digging coal,” The Guardian writes. The fund committed to selling off its last shares in BHP by August 3, and “will also seek to reduce its carbon-intensive holdings, such as with the traditional oil giants, while investing more money in renewable energy infrastructure.”
At the same time, Nest “is hesitant about describing its new policy as a full divestment program,” the news report adds. “It said it remained interested in oil companies that were transitioning from carbon-based fuels to green energy and renewable technology and that it would use its muscle to challenge them and push for stricter targets.”
That financial muscle may be on track to grow in the years ahead. Nest “still has relatively little money under management—around £12.2 billion—but it is expected to become a mammoth player in the industry as the savings from millions of workers pour into its coffers in the coming decades,” The Guardian says.
UK pension advocacy group ShareAction praised the announcement.
“Nest’s policy acknowledges the impact of its investments on the planet and takes responsibility for them,” said campaign manager Lauren Peacock. “By committing to engage with companies head on, all the while moving assets out of high-carbon sectors, Nest is setting clear expectations for those most responsible for the climate emergency and demonstrating the power of pensions to move them along a more sustainable path. It is vital that engagement moves past disclosure and leads to meaningful change by companies if we are to curtail the climate crisis.”