Divest public sector pensions

Chapter 12.1 Public sector

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

International

UK Govt

Scottish Govt

Local Authorities

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. In 2023, these funds had a total of around £2bn invested in fossil fuel companies around the world. That £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 fuels 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.

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. The Councillors controlling both the Strathclyde and Lothian funds have voted to divest but progress has been slow so far, with the Lothian fund actually buying extra shares in fossil fuel companies in the year to March 2024.

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

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