A top councillor has defended Avon Pension Fund for investing in fossil fuel companies following criticism from environmental campaigners.
Cabinet member Steve Pearce, Bristol City Council’s representative on its staff pension scheme, said it was necessary to pump money into firms with the “deepest pockets” such as Shell because they were now at the forefront of new, low-carbon energy technologies.
But Green Cllr Martin Fodor criticised the stance and said Avon should follow the example of some of the world’s leading cities by severing ties with oil and gas industries.
Labour Cllr Pearce told a council meeting that the moral argument for the local government pension fund to buy into clean energy businesses had been won because it now made economic sense.
“There are very few ‘pure’ fossil fuel players any more. Most of them are broader energy players,” he told human resources committee members.
“The fossil fuel businesses that are still out there run the risk of going out of business and deservedly so because they are taking a very narrow, short-term view of investing and extracting fossil fuels.
“If you want to invest in one of the best battery storage businesses in Europe, you had better be prepared to invest in Shell.
“The way these new technologies will be brought along quickest is by the people who have the deepest pockets, and most of those deep-pocket businesses with large cash flows are the existing energy companies.
“We could exit Shell completely but if we did, we would be saying there is a whole heap of wind and solar power and battery storage which we cannot invest in.”
He said pension funds including Avon were not strictly “divesting” from fossil fuels but were “decarbonising” – investing in businesses that are less carbon intensive.
“Avon is a leader in the move to support decarbonising,” Cllr Pearce said.
“One of the more resistant fossil fuel energy companies to the move to decarbonising has been historically ExxonMobil.
“Avon Pension Fund hasn’t held Exxon shares in donkey’s years for specifically that reason.”
He said fossil fuel firms should be “persuaded of the error of their ways and made to change” rather than the scheme simply disengaging with them.
“The direction of travel is definitely to put more money into low-carbon investments,” he added.
“The degree to which that happens is the point that’s up for debate.”
Lib Dem Cllr Gary Hopkins told the meeting on Thursday, March 5: “It does not make any sense to talk about the moral situation.
“The pension fund trustees have a duty to look after the money on behalf of the pensioners who are investing.
“The market is actually driving us towards more sustainable investment and solutions.
“There are not enough wind farms and there is a danger of following the moral argument to invest in something because it’s fashionable and the right thing to do rather than it being economically the right thing to do, so there have to be careful choices.
“It’s about moving in the right direction in a responsible way that’s consistent with getting a return for investors.”
In a written statement to the committee, Cllr Fodor said Avon Pension Fund’s investment policy did not go far enough.
He said: “In the long term it is clear we cannot keep our investments with fossil fuel producers, both due to the growing financial risk and if we are remotely serious about tackling the climate emergency we have declared.
“At the same time we need to scale up our investments in sectors like renewable energy, energy efficiency, battery storage, and smart systems.
“These will likely boom over the coming years and they represent the technologies we desperately need to scale up to transition away from fossil fuels and prevent the worst climate scenarios – a path of runaway global heating we’re currently on course for that will devastate the planet’s animal, human and plant life.”
