Scottish councils have more than £2 billion of pension funds tied up in fossil fuels industries, new analysis has revealed.

The new findings by Friends of the Earth Scotland and Platform have unveiled that investments have been made in some of the world biggest polluters including Shell, BP, Exxon Mobil, Chevron and Equinor.

The new data has revealed that the biggest fossil fuel investor in Scotland is also the country’s single biggest local government fund, the Strathclyde Pension Fund, administered by Glasgow City Council.

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Strathclyde Pension Fund was found to have invested at least £618 million in fossil fuel companies.

Glasgow City Council voted to divest from fossil fuels in April 2021, but campaigners have raised concerns that the Strathclyde Pension Fund, which manages the money, has still not enacted this change.

The Lothian Pension Fund, administered by Edinburgh City Council, has at least £350 million invested in fossil fuels. The capital’s councillors also voted in favour of divestment in November 2022, but the fund managers have not taken action to do so.

But member councils do not have authority over the funds which are overseen by their own committee, meaning the interests of the council cannot drive the pension fund.

With the majority of oil and gas companies set to expand their operations, campaigners are calling on pension funds to listen to councillors and stop funding fossil fuels.

Sally Clark, divestment campaigner at Friends of the Earth Scotland, said: “It’s unbelievable that despite clear direction from councillors, the biggest council pension funds in Scotland are still investing this obscene amount of money in fossil fuel companies that are driving climate breakdown.

“Councils must play their part in protecting the long-term future of their employees by ending their support for oil and gas expansion and investing in building a cleaner, safer future for us all - but their attempts to do this are being blocked by the pension fund managers.”

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She added: “The money moved away from fossil fuels could instead be invested in ways that support local communities and protect the planet for everyone, like renewable energy.

“As skyrocketing energy bills are plunging millions of people into fuel poverty across the UK, this transition is more important than ever.”

Greens MSP Maggie Chapman said that "after a week of climate chaos that hit large parts of Scotland, many might be shocked to know that Scottish councils are pouring so much public money into polluting industries that are doing so much damage”.

She added: "It is particularly disappointing that Glasgow City Council does not seem to have acted in the two years since it voted to end fossil fuel investment.

The Herald: Maggie ChapmanMaggie Chapman (Image: PA)

“We will work with Green councillors in Glasgow to get answers and do everything that we can to ensure that it does.

"There is a responsibility on all levels of government to take action. Our local authorities have the chance to lead by example and ensure that they are putting the public good ahead of profits for polluters.

"There is no excuse for continuing to fund climate chaos. Public institutions and others should divest, and divest now.”

Across the UK, £16 billion of council pension funds is invested in the fossil fuel industry. Over 20% of UK councils now invest less than 1% of their fund into fossil fuels - a 10 fold increase since 2020, the last time analysis was conducted. Pension funds in Scotland still invest over 3% into fossil fuels.

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A Lothian Pension Fund spokesperson said: “Lothian Pension Fund invests responsibly with the objective being to pay pensions for over 80,000 members, whilst aiming to reduce the costs to employers and investing in a responsible manner.

“This includes considering climate risk and aligning to the Paris goals, evidenced in our statement of responsible investment principles and stewardship report.”

Strathclyde Pension Fund said it has already reduced its exposure to oil and gas by more than 50% and has no direct holdings in coal while its energy investments are overwhelming weighted towards renewables.

More than £750 million is invested in renewables by the Strathclyde Pension Fund, including wind, solar and hydro schemes. Under a policy implemented in 2022, investment managers are required to assess the environmental risk of every investment they make and advise the fund of particular strengths and weaknesses.

The fund also receives updates on what engagement is taking place to improve performance, as well as changes in holdings.

Chairman of Strathclyde Pension Fund, Richard Bell, said: “I’m proud of the work we are doing, but I’m also realistic. We are breaking new ground and we are learning all the time – so are our investment managers and, to a great extent, some of the companies we hold.

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“In some cases, the data and the disclosure of plans and targets that we are looking for just aren’t there because – at a government and regulatory level – they have never been demanded. So, we’re asking for things very few other investors are and we’re trying to take people with us.

“In others, you have to give the managers the opportunity to go back and put a little bit of pressure on, to ask the difficult questions. If the right answers don’t come back, that’s when you might reasonably expect them to be thinking about divesting.

“It’s a journey – and we’ve learned a lot from colleagues in New York, who are really the only big fund that are further along the road. They’ll tell you, it took them five years to get on top of it – at the moment, we’re barely a year in.

“The reality is, Strathclyde was probably cleaner than most funds when we started this – and it’s only going to get cleaner. The more funds that join us on this journey, the easier it will get for all of us.”