The European Grandparents for Climate (EGC) group in the UK is Our Grandchildren’s Climate (OGC). They are paying attention to pension funds, which have traditionally invested also in the fossil fuel industry, about which Sigurd Reimers has written the following lines. We are wondering in Finland too, how our funds are built?
Nearly half of all investments are made by pension providers (look at the video Your money is in fossil fuels). In the UK most providers invest some of their funds in fossil fuels, directly or indirectly. Because of the number of investment managers involved at various stages, the companies and their pensioners may not be aware of what their future pensions are being invested in. A few pension funds may not invest in armaments, child labour or tobacco; but few exclude, or try to exclude, fossil-fuel investments.
“Pensioners” are not just old people. They are also young people, who have recently joined a pension scheme. They will not reach pensionable age until long after the dates set for net-Zero, by which time the earth’s atmosphere will almost certainly have heated up well beyond the 1.5 degrees C set by the United Nations. The world will be a dangerous place.
In the UK there is a myth that pensions must, by law, be invested where they provide the biggest profits (the “fiduciary duty” principle). This is not true: The UK Companies Act (2006) states that companies have a legal duty to promote the success of their company. “Success” can mean many things; for instance the well-being of the families of pensioners is important; this is not the same as maximizing profits.
We, the elderly, have a particular interest in pensions, partly because most of us are receiving a pension, because we have the time, and also because we have some responsibility for the world that we have managed, or mismanaged. We worry about the world we are handing over to coming generations.
Pension funds have to take a long view. This includes the difficult task of trying to predict the future. As it begins to run out of fossil fuels (North Sea gas and oil are a good example), the Earth becomes more depleted, and prospecting for what is left becomes more and more uncertain and unaffordable. Fossil fuels will soon become “stranded assets”. No-one will want to invest in a dying company.
Pension funds also depend on banks and insurance companies; these, in turn, depend for their existence on their reputation. There are also insurance companies “of last resort” (sometimes the State itself) that will, for a price, insure these companies. The big banks and insurance companies are spread across Europe, but they have offices in our towns, and most of us interact with them without thinking too much about where they place their money – sorry, our money! The global is also local.
What can be done?
Pensioners (current and future) can demand that their pension providers stop investing in fossil fuel companies and ensure that these investments be rapidly moved to sustainable sources of energy. Pensioners can work to expose the dishonest “greenwashing” tactics of fossil fuel companies when they advertise green credentials that they do not have. These companies are extremely powerful and sometimes take campaigning groups to Court. However, they can be vulnerable, though, to a poor reputation; a bad reputation can make a company collapse. So, we are not alone: there are organizations (eg in the UK www.shareaction.org and www.clientearth.org) with experts that will help us in this struggle.
Climate Justice
Climate change can seem like a vague concept, its effects lying in the future or in countries far away. But climate change also already affects our own countries, with wilder and more frequent floods and storms, and more episodes of drought and extreme heat. This particularly affects those of our own citizens who live in the worst insulated homes, have the lowest and most precarious incomes, have the poorest health, and are the least mobile. Climate change is therefore already a central issue of housing, income, health and transport inequalities, and our pensions are part of that problem.