Chapter 12.1 Public sector

Divest public sector pensions

Take public sector pension investments out of fossil fuels and encourage the funds to invest in projects like social housing and renewables in Scotland.

Local Authorities
UK Govt
Scottish Govt
Emissions reduction
Behaviour change

One area where the public sector could be leading by example is in relation to pensions. Most of the public sector, and many third sector organisations, have their pensions with the 11 Scottish Local Authority Pension Funds, with the Strathclyde fund being the second biggest public sector pension scheme in the UK. These funds currently have a total of around £1.2bn invested in fossil fuel companies around the world.285 That £1.2bn could instead be invested in energy-efficient social housing, funding public transport or creating green infrastructure in Scotland, guaranteeing a good return to the pension funds and simultaneously doing social and environmental good in Scotland. The Falkirk scheme has invested £30m into social housing locally without explicitly linking it to taking money out of fossil fuels286 and several English schemes have invested in local renewables instead of fossil fuels. In London, pension organisations are working together in a fund aiming to invest £300m into affordable housing, community regeneration, digital infrastructure and clean energy around the city.287

Policy changes could be made in a matter of months. Even if the climate change arguments do not prevail, fossil fuel investments look increasingly volatile and risky, so there has already been a general movement among investors, first out of coal, then out of all fossil fuels.

Despite passing relatively strong climate emission legislation, the Scottish Parliament’s own pension fund also has investments in fossil fuels.288 In contrast, most Scottish universities and churches, and many NGOs, have already divested from fossil fuels.

For further information:


Divesting to protect our pensions and the planet – An analysis of local government investments in coal, oil and gas, UK Divest, 2021,


Falkirk targets social housing with £30m investment, Pensions Expert, 2015, housing-with-30m-investment?ct=true


MSP pensions funded by investments in fossil fuel companies, Friends of the Earth Scotland, 2021, funded-by-investments-in-fossil-fuel-companies/

Version 1.0: September 2023

The contents of this document will be updated on a regular basis.