Manchester City Council pressures GM Pension Fund to divest.
Manchester City Council has declared a climate emergency and has started to act. One of the actions in the motion of declaration is to ask the Greater Manchester Pension Fund (GMPF) to divest.
The Manchester council motion included this action:
Through our role on GMPF, encourage divestment in fossil fuels as early as possible.
The Executive member for the environment, Councillor Stogia started the ball rolling. Councillor Stogia first wrote to the Fund and the Fund’s response (appended to councillor Andrews letter) was the same unconvincing story we always hear from the Fund (we are doing a lot / we can’t divest because we are making money to pay pensions / it’s better to talk the oil and gas giants into not being oil and gas giants).
Councillor Paul Andrews, who is Manchester council’s representative on the Fund’s Management Panel, has written a firmly worded response. The key points follow.
Cllr Andrews notes that Manchester, as well as the Greater Manchester Combined Authority, seeks to become “zero carbon” by 2038, and is looking at options to bring that date forward to 2030. GMPF by contrast, as confirmed in their 2019 Annual Report and the letter to Cllr Stogia, plans to become carbon neutral by 2050. He asked “if there is any scope now, and an action plan being considered, for GMPF to reconsider this in line with the 2038 pledge that is being made by the GMCA and Manchester City Council”.
Cllr Andrews questions the Fund’s assertion, as do we, that “over the last three years we achieved at least £400 million more in returns than if we had not been invested in any industries such as BP or Centrica…. which are regarded as being fossil fuel investments. Accordingly we have clear evidence that disinvestment at this stage would cause material financial detriment to the Fund”. He asks for clarity about this “clear evidence”, as we did when we asked to see the calculations on which it was based. We are still waiting for a response….
Cllr Andrews also points out that divestment can work in parallel with the switch to renewable energy, “and arguably can be a real tool to assist the ‘Just Transition’ by encouraging such schemes in a practical manner in the next few years”. The Fund seems to have misunderstood what ‘Just Transition’ means.
Councillor Andrews also points in several places to those Funds that are divesting, which suggests that the Fund’s position could be based on a misreading of the evidence, and suggests that the Fund establishes a working group to look at some of those examples “as a way to move the GMPF further forward in more quickly divesting from fossil fuels and help unlock further investment instead in renewables.”
Finally, Councillor Andrews notes that the GMPF is working with three other Pension Funds to take over Centrica’s minority stake in EDF’s nuclear power concerns. He asks whether this is the kind of renewable energy that the Fund should be supporting.
We are very pleased to see Manchester City Council taking a robust line with the Fund and thank Councillor Andrews for following up this element of the council’s Climate Emergency declaration. Most other Greater Manchester councils omitted to include divestment in their declarations, although as noted previously, Trafford has since passed a separate motion calling for divestment. It is notable that the Tameside council, which manages the Fund, is the only Greater Manchester council that has not recognised that we are indeed in a climate emergency. This week’s finding from the World Meteorological Association, that greenhouse gas emissions are still climbing at accelerating rates should be a wake-up call to them.
We look forward to seeing the Fund’s response to Cllr Andrews’s challenge.