Hackney Council has announced that investment into carbon-emitting companies from its £1.7bn pension fund has dropped by a third between 2016 and 2019.
This drop takes the pension fund over halfway to a target of reducing exposure to future CO2 emissions by 50 per cent by 2022, though campaign group Divest Hackney has called for the council to take ever more ambitious action on the issue.
The Town Hall is also understood to be dropping its investment into Indonesian company PT Bukit Asam – majority-owned by the Indonesian government, it is a coal-mining company that also manages and operates thermal power plants, as well as providing coal-mining consultation services.
A Divest Hackney spokesperson said: “It’s great to see progress in the reduction of exposure to carbon. Unfortunately this is not moving fast enough.
“When Hackney set its target in 2017, they were aiming for two degrees of global warming, not the 1.5-degree limit that the international community agree we should aim for.
“The fact that the fund is on track to outperform its target indicates that the target is achievable and the future investment strategy should aim for further reductions in carbon exposure.”
Divest went on to repeat calls for Hackney to divest its holdings in large fossil fuel companies such as BP, Shell and Exxon.
The group is also claiming that a Freedom of Information request on precisely how much is currently invested in fossil fuel companies had been denied by the Town Hall.
Hackney’s pensions committee is responsible for ensuring the “effective and efficient” running of the Town Hall’s pension fund, with the committee chair Cllr Robert Chapman stressing last year that the council’s fiduciary duty outweighed strictly “political and moral” concerns.
It is understood that the current strategy of aligning with the two degrees of global warming scenario as set by the International Energy Agency is being considered by the Town Hall for being dropped in favour of aiming for the 1.5 degrees of warming called for by the Intergovernmental Panel on Climate Change.
The current level of carbon emissions represented within the pension fund’s portfolio in June 2019 was 4.319m tonnes of CO2, compared with 7.11m tonnes at July 2016.
Hackney Council’s group director for finance Ian Williams said: “Climate aware investing is evolving rapidly, both as climate science advances and as investment markets’ understanding of the subject deepens. Even since the Fund set its target three years ago, the backdrop has changed considerably.
“Climate change and its implications are increasingly high on the agenda for policy makers and the general public, with the IPCC suggesting that avoided climate change impacts on sustainable development, eradication of poverty and reducing inequalities would be greater if global warming were limited to 1.5°C rather than 2°C. This would require rapid and far-reaching transitions in energy, land, infrastructure (including transport and buildings), and industrial systems.
“Against this backdrop, we are looking to broaden our approach to climate aware investing. Our 50 per cent reduction target helps to reduce transition risk for the Fund, by reducing the risk that it will be exposed to potentially stranded assets. However, we now also wish to make a positive contribution to reducing real-world emissions and assisting in the transition to a low carbon economy.
“As part of developing our new investment strategy, we will consider how best to achieve this impact whilst achieving a competitive financial return. This is likely to involve investment in new asset classes, such as renewable infrastructure. As part of these changes, we expect our exposure to unlisted assets to increase, and this will also mean finding new ways to assess both our carbon exposure and impact on real-world emissions.”