East Sussex Local Government Pension Scheme considers agenda for withdrawal from fossil fuel investments

In a decision that has sparked debate, the East Sussex Pension Fund, a UK local government fund, has chosen not to divest from its fossil fuel holdings. The vote took place at the pension fund's latest committee meeting on 25 September, following a process of more than two years.

The decision comes after a detailed study on the implications of divesting fossil fuels from the East Sussex Pension Fund's portfolio was commissioned by the fund. The consulting firm ISIO, who produced the report in September last year, outlined the scope of East Sussex's exposure to fossil fuel assets and detailed the financial and logistical challenges of divesting specific assets within a pooled fund structure.

The complexities of divesting from fossil fuels within pooled investment vehicles were highlighted during the debate. The committee discussed three proposals to divest from fossil fuels in equities, bonds, and private markets. Each of these proposals was voted down by the committee, with a 3 to 2 majority against each.

Green Party councillor Georgia Taylor and Lib Dem councillor David Tutt put forward proposals for divestment. Councillor Taylor emphasized the symbolic power of the vote, stating that it is important to deliver on the policy of keeping emissions to a 1.5-degree target for global warming. She also stressed the importance of stigmatizing investing in organizations that extract additional fossil fuels.

Councillor Taylor's proposal, along with those from other councillors, was met with opposition. The fund explored the prospect of selling its fossil fuel assets held within pooled structures during the two-year process, but ultimately decided against it.

The report from ISIO also highlighted the potential impact of divestment on the fund's returns, as well as the difficulty in finding suitable alternatives that would match the performance of fossil fuel investments.

The decision not to divest from fossil fuels has been met with criticism from environmental groups, who argue that it goes against the commitment to tackle climate change. However, the pension fund's decision reflects the complexities and challenges involved in divesting from fossil fuels, particularly within pooled investment structures.

The East Sussex Pension Fund's vote to not divest from fossil fuels is a significant development in the ongoing debate about the role of fossil fuels in investment portfolios. As the discussion continues, it is clear that the issue will remain a contentious one for many local government funds across the UK.

East Sussex Local Government Pension Scheme considers agenda for withdrawal from fossil fuel investments