Meeting with representatives of the 

Avon Pension Fund

L-R: Freddie Collins, Liz Woodyard, Tony Bartlett, me (Richard Lawrence), Elaine Ashley

I had been really looking forward to this meeting. If you had asked me 3 months ago to attend a meeting with Avon Pension Fund (APF) representatives I would have been concerned that my level of knowledge of pension funds would make such a meeting very one-sided. But with the support of 350.org's and Share Action's knowledge and advice I felt confident that we had some important points to make.

So finally there we were sat round the table with representatives (Liz Woodyard, Investment Manager and Tony Bartlett, Head of Business Finance and Pensions) from APF in their Keynsham office, to talk about divestment. We had been invited to meet Liz and Tony so that they could fully understand our concerns and to inform the decision making process on the development of the scoping document for the review of their Responsible Investment (RI) policy.

They were very friendly and open in their approach to the meeting. It was clear from the outset that this meeting was as much about them informing us of APF’s investment practices and restrictions, as it was about them listening to our arguments for divestment from fossil fuels and support of the transition to a low carbon economy.

There was a definite resistance to out-and-out divestment. But they acknowledged that the time had come for the fund to consider the carbon footprint of its investments, as well as building climate change risks and opportunities into the scope of their review. I was a little blinded by investment science in their reference to increased risks. And costs of particular investments were barred and at that stage we agreed to deliver.

Tipping points were mentioned in relation to investment in renewables as well as alternative criteria for investment decisions (low carbon funds). Unfortunately in their eyes these tipping points had not yet been reached. They were concerned that to date renewables have not achieved good growth and the tools for the investment industry to use to inform low carbon investments had still to be proven.

On a positive note we learnt that Mercer, the investment consultant that APF use, is going to be involved in the review process. We gave this the thumbs up as they have just published an excellent report on conducting a climate risk assessment. Liz was also aware of Aviva’s recent publications in response to climate change, and the Environment Agency’s (EA) RI and climate change strategies. Liz felt however that the EA had only taken this approach because of the nature of their work and reputational risk so not all their practices would be used.

We exchanged information explaining about 350.org's work worldwide and the soon-to-be-launched information relating to Local Authority pension funds in the UK where the level of fossil fuel investments would be published. We told them of other pension funds, both international and UK based, who had either divested from some fossil fuels or invested in renewables.

Liz told us of their use of Jupiter who invest in industries mitigating climate change. We expressed some surprise at this and thought APF could do more to manage their image by promoting positive stories. Liz and Tony told us about some of the challenges of managing the pension fund which included the sharp rise of liabilities within the fund, government pressure to reduce cost of the scheme, paying out more than they get in and the increasing gap between fund value and liabilities.

A rather disappointing exchange followed on member involvement in the up and coming review and it became clear that annual member meetings or widespread consultation was not going to happen. We expressed our disappointment.

I got the impression that Liz and Tony had accepted climate change was here and needed to be responded to, but they were uncertain as to how that would unfold during the process of the review and rewriting of the responsible investment policy. My hope is that the RI policy is framed in such a way as to make it unlikely that investment managers would invest in the fossil fuel industry in future.

The meeting has given us much to think about, not least the enormous responsibility carried by pension funds and the complex set of technical rules of best practice within which they operate. The big question is are these now still fit for purpose and able to respond appropriately to climate change risks? Or is there a need for a rethink and greater intervention to steer and guide investment decisions to support a new low carbon economy? I hope that over the future years our involvement and wider member support will help encourage APF to take the long term view and divest from fossil fuels and support the transition to a low carbon economy. Today felt like another positive step along that road but there is a long way to go.

Richard Lawrence 18.08.2015

In Other News...

The Australian Capital Territory (ACT) has just announced that it will be the first Australian state government to divest from fossil fuels.

The announcement comes after a two year community campaign that has seen health, faith, union and environment groups call on the Barr Government to divest from coal, oil and gas companies.

Read the full story here.

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