South Yorkshire pension scheme aims to cut BP and Shell investments following renewable energy U-turn

South Yorkshire Pensions Authority decided at its latest meeting (March 13) to look at moving to a fossil fuel-free investment portfolio. Following new US President Donald Trump’s call to “drill, baby, drill”, BP and Shell both announced they would move away from renewables and turn back to oil and gas production.

BP said it will increase its oil and gas investment to £7.9 billion per year, while decreasing funding for renewables by more than £3.9 billion.

The authority has a policy to achieve a net zero level of carbon emissions from holdings in its investment portfolio by 2030. It decided to move beyond its previous tactic of engaging with both firms about responsible investment following their latest announcements.

The Barnsley-based pensions authority manages the pensions for 180,000 local authority workers in the South Yorkshire region. It says it is “the only democratically accountable single purpose pension organisation in the UK”.

Coun Alexi Dimond, a Green member of Sheffield City Council, pushed the meeting to go further.

Divestment

He wanted to revise the responsible investment policies and Net Zero Action Plan the authority was reviewing to include divestment from fossil fuels and arms manufacturers. However, he did not get a seconder for his proposal.

Coun Dimond voted against the proposal made by city council LibDem member Coun Andrew Sangar which the meeting adopted. That will now go forward to a meeting of the Border to Coast pensions pool.

Border to Coast manages Local Government Pensions Scheme funds on behalf of 1.1 million scheme members and 3,100 employers, managing assets totalling £64bn, according to its 2023-4 annual report.

Official George Graham mentioned the Robeco pension fund, which does not even attempt to engage with tobacco companies, judging that firms cannot be persuaded away from producing products that kill people.

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Coun Dimond said: “In terms of the Robeco argument, it would apply to fossil fuel companies but also arms manufacturers as well – someone that is exclusively manufacturing weapons and they’re never going to change their business model because of engagement.

“Coming back to fossil fuels, half the world CO2 emissions come from 36 fossil fuel firms, according to research published this week. In terms of our holdings in fossil fuels and arms holdings, it’s just 3.3% of the entire fund, when we are about 160% funded.

Exclusion

“This is not going to have a detrimental effect on our ability to pay pensions and advice on the fiduciary duty that we’ve been provided by the Local Government Pensions Scheme confirmed that far higher levels of exclusion could be acceptable. It gave an example of 13%.”

Meeting chair, Sheffield Labour councillor and current Lord Mayor Coun Jayne Dunn, said: “It would be very easy for all of us to grandstand and just say but we really want to effect change.”

She will take the decision forward to the next Border to Coast meeting as the authority’s representative.

Coun Sangar said: “I just thought statements by BP were absolutely appalling and I just wanted to distance myself from those statements.

“I have been someone who said we need to engage, engage, engage, but they are somebody who is making statements like that and I am not convinced about continuing engaging if that’s what they’re saying.”