WMPF has the third highest fossil fuel exposure in UK

A new report out today from UK Divest (Friends of the Earth & Platform) has found that West Midlands Pension Fund have the third highest exposure to fossil fuels of any local government pension scheme in the UK, investing £508 million in the top 200 most polluting fossil fuel companies in the 2019/2020 financial year.

The pension fund should be divested from polluting fossil fuel companies and reinvested in the region to create local green jobs. For example, Jaguar Land Rover, which has just announced it will phase out diesel engines, has a huge engine factory in Wolverhampton. Jobs like these need to transitioned to the clean economy, and the pension fund can help to fund this opportunity.

The report is covered by the national press Times, Express and Guardian.

DivestWMPF have been campaigning since 2015 for the pension fund to divest from fossil fuel companies because fossil fuels are the main driver of climate change and incompatible with keeping a safe and habitable planet for retirement and future generations. They are also risky assets to hold now that the world is moving rapidly towards low carbon technologies to provide energy for the future. Despite engagement with the fossil fuel companies by WMPF and other local government pension funds, the report highlights the lack of successes to show for this effort. For example, one company often highlighted as an engagement success, BP, has a long way to go – from the report:

“BP, the second largest beneficiary of direct investments from local authority pensions, caused Deepwater Horizon, the world’s largest ever oil spill in 2010. Despite advertising themselves as a ‘green’ energy company, BP plans to spend £41 billion on new oil exploration in the next decade, including projects in the Canadian ‘tar sands’, the Arctic National Wildlife Reserve and the Amazon rainforest (Corporate Watch, 2020)”

Over three quarters of UK councils have declared a climate emergency, this includes the West Midlands Combined Authority, Birmingham City Council, Wolverhampton Council and others. Continuing to invest in companies which are planning expansion of fossil fuel extraction completely undermines these local authorities’ efforts to decarbonise.

The report also make it clear that fossil fuels are a risky investment:

It’s a financial risk—with UK Public Pensions losing £2 billion on oil investments in the last 4 years. 5 It’s also a political risk—with the UK public more concerned about climate change than ever before.

The report points to research by Platform that WMPF recently lost £80 million on fossil fuels:

Losses by absolute value 2017-2020

There has never been a better time to divest from fossil fuels.

After a decade of austerity and the devastating economic impact of Covid across the UK, local councils can use their pension funds to support local investment priorities. Some already do, and in 2021, it’s time for others to follow their lead.

If you live in Wolverhampton, please contact your local councillor and tell them to pledge to support fossil fuel divestment.

UK Divest have a new website where you can find out more about divestment and get involved in your area.

WMPF reveals fossil fuel exposure

So now we know. West Midlands Pension Fund have finally declared in a response to a Freedom of Information request by DivestWMPF that at the end of 2019, by their own calculation, they had £587 million invested in fossil fuel companies.

If you live in Wolverhampton, please click the button below to email your councillor about this:

In December last year, WMPF finally released a climate change disclosure report , after pressure from an increasingly impatient Pensions Committee, from campaigners, and a public that is increasingly alarmed by climate risk on the future they will be retiring into. Embedded in this report was a chart that appears to show 6.9% of equities invested in fossil fuels, a figure higher than previously estimated by campaigners.

This information hasn’t come easily. Since the DivestWMPF campaign started, it has been a struggle to figure out how much of the fund was invested in fossil fuels. Since the launch of DivestWMPF in 2015, campaiTake actiongners have had to pour through lists of assets provided by the pension funds, comparing with lists of those companies holding fossil fuel reserves. This effort is hindered by many black box indirect investment funds making it impossible to know exactly how much of members’ pensions are supporting this most destructive of industries.

This wasn’t enough for DivestWMPF. We wanted to know how much was invested by our local government on behalf of council workers in the industry that has most contributed to the destruction of the climate. So we submitted a Freedom of Information request and to the managers credit, we got direct answers to our questions. The pension fund declares £587 million, £100 per person in the West Midlands invested in fossil fuels as of Dec 2019. The Fund’s definition is different from the metric traditionally used by campaigners, which is based on companies in the top 200 companies holding fossil fuel reserves. From the FoI response:

The carbon risk metrics within the Fund’s TCFD Report are based on a dataset provided by MSCI ESG Research. MSCI define ‘weight in Fossil Fuels’ as the portfolio weight in companies that own fossil fuel reserves.

DivestWMPF will continue to press for this to be £0 per person. The West Midlands cannot simultaneously declare a climate emergency and continue to fund companies which fight to maintain the status quo, plan for expansion of drilling and lobby against the necessary policy changes.

If you live in Wolverhampton, please take part in our e-campaign and write to your local councillor about this:

Introducing the DivestWMPF newsletter

We are delighted to introduce our free newsletter. Sign up now to receive the latest divestment news in your inbox.

Our first edition asks if a string of recent huge divestment announcements point to investors starting to realise the limitations of engagement. We look at the recent massive losses for fossil fuel majors, and ask if Joe Biden’s surprisingly aggressive raft of climate announcements signal a tipping point for fossil fuels.

Fossil Fuel Divestment: A Plea for the Future

The time for investing in fossil fuels is over. WMPF must urgently commit to divesting from fossil fuels and reinvesting locally to support a low carbon future. We ask councillors to sign our pledge at https://divestwmpf.org/the-pledge/.

It is, I promise, worse than you think. If your anxiety about global warming is dominated by fears of sea-level rise, you are barely scratching the surface of what terrors are possible, even within the lifetime of a teenager today. 

David Wallace-Wellls, The Uninhabitable Earth

Climate change is an existential threat to humanity. Without global action to limit greenhouse gas emissions, the climate will change catastrophically with almost unimaginable consequences for societies across the world.

UK Treasury

A recent report by West Midlands Pension Fund has revealed for the first time that the fund invests up to £850 million, 6.9% of its total equities in fossil fuel companies. [1]

97% of climate experts agree that human activity, mainly the burning of fossil fuels has caused climate change. Despite a decades-long campaign of misinformation campaign by the threatened fossil fuel industry, UK public concern has reached a record high. The public understands the combined threats of spiralling world hunger, mega-storms, lethal heat-waves, huge regions uninhabitable, diminishing water supplies due to melting Himalayan glaciers, rising sea-levels and the death of all coral reefs, to name a few. Also people in the UK are noticing changes around them, such as more frequent extreme weather events (heatwaves, flooding, etc.), and are realising that climate change is not something that will only affect their children – it is something which impacts us all today.

The public now understands the win-win of green job-creation opportunities, of strong government climate policy and investment in low-energy homes, clean energy, etc. Joe Biden’s victory has proven that climate is now an election winning issue. And renewables are beating fossil fuels on price much faster than experts at the IEA predicted. Plus, they are being downgraded by the credit agencies, making fossil fuels an increasingly risky investment.

However, local government pension schemes like WMPF are still clinging onto the idea that “company level engagement continues to successfully drive behaviour”, even as profits are cut and valuations fall across the fossil fuel industry; an industry that despite the greenwash, spends 38% of its lobbying activity fighting climate legislation.

This is where fossil fuel divestment steps in. It is the moving of money out of fossil fuels and into low-carbon and socially-beneficial investments.

It is time for councillors to ask themselves if it is right for the pension fund to be contributing to the destruction of humanity’s life support systems, investing in an industry determined to extract enough fossil fuels to create an “existential threat to humanity” (UK Treasury). A recent report by Oil Change International found that “not a single climate plan released by a major oil company comes close to aligning with the urgent 1.5ºC global warming limit”. 

Councillors need to challenge the Fund to weigh the extremely speculative possibility of the fossil fuel industry transforming itself en-masse into a renewables industry within 10-20 years against the (increasingly unlikely) possibility of a continuation of its historically strong returns. History hasn’t been kind to incumbent industries like Kodak and Blockbuster who failed to respond to technological change. Even prior to the recent pandemic-related shock to the fossil fuel industry, research has shown stock market performance between 1990-2016 based on all stocks and excluding fossil fuels was statistically insignificant (< 0.01%). The Fund has a lot to lose from fossil fuels (Local Government Pensions already lost £683 million when coal crashed), and a huge amount to gain by being on the right side of history.

A vote in favour of divestment would demonstrate to the public that councillors are serious about tackling the climate emergency that they have declared; it is highly unlikely to negatively impact returns; indeed, it is more likely that returns will be protected if fossil fuel stocks plunge still further in a disrupted geopolitical landscape.

Take Action

DivestWMPF asks local councillors to sign our pledge to support divestment: https://divestwmpf.org/the-pledge/

Find Out More

DivestWMPF have produced a number of briefings for councillors, which are available on our website, divestwmpf.org. The following may be of particular interest:


[1] The figure of £849 million in fossil fuel equities is based on WMPF’s Climate Related Financial Disclosures 2020 report which discloses 6.9% total equities invested in fossil fuels. The categories of investments which this includes is not detailed, so the following categories from the 2020 Annual Report are assumed: UK equities, Overseas Equities, Pooled investment vehicles, totalling £12,308 million in March 2019. DivestWMPF have raised a Freedom of Information request with WMPF to clarify this figure, and this briefing will be updated when the information is received.

Response to the climate change statement 2020

In September 2020, DivestWMPF and over 40 people from across the West Midlands wrote to the WMPF Pensions Committee calling on the fund to divest from fossil fuels. Letter writers received a statement from WMPF outlining the fund’s policy. This is our response to WMPF.


Divest West Midlands Pension Fund (Divest WMPF) would first like to dthank you for your comprehensive climate change statement in response to our email. The Divest WMPF team and our supporters acknowledge the significant steps already taken by the Fund and its Managers in recognising the importance of tackling climate change. It is clear to us that the Fund understands how grave the impact of planetary warming is on the global population and the disastrous future it represents.

The Fund’s inclusion in the IICC and Climate Action 100 Plus initiative, amongst others, is evidence of the goals shared with Divest WMPF and of a commitment to the stated aim of aligning with the Paris Accord 2016: limiting warming to 1.5 degrees above preindustrial levels.

In responding to the Fund, Divest WMPF would like to first address some key points within the Climate Change statement:

‘The Fund continues to believe that engagement is more likely to lead to decarbonisation than a divestment approach. There is no evidence that giving up the opportunity to influence investee companies is likely to lead to superior environmental outcome.’

When looking at ‘engagement’ we cannot leave aside the historic role that fossil fuel companies have played in the production of carbon emissions, in the obfuscation and suppression of science, in the creation of thinktanks to invalidate and create uncertainty around causes of climate change, the denial of their involvement in it and then the billions spent on deliberately misleading advertising and lobbying against climate policy.[1]

However, it is important to focus on positive outcomes where they exist and Divest WMPF would welcome clear evidence of positive outcomes resulting from WMPF’s enagagement.

The Fund states that: ‘LAPFF engaged with 170 companies in 2019’ and ‘Last year Hermes EOS has engaged with 141 companies on the matter of climate change’. It would be helpful to us if we could better understand the nature of that engagement.  Which are the companies that have been engaged with and what is their core business? Are all of the companies mentioned fossil fuel companies?

Further to this, on what basis is the ‘engagement’ being deemed fruitful? Can the Fund provide a few examples of successful engagement? For example, a measured reduction in CO2 emissions or investment in renewable technologies in alignment with the goals of the Paris Climate Accord or, ideally, the IPCC report of 2018. In what quantifiable ways has the behaviour of the fossil fuel companies changed as result of the Fund’s engagement?

And, crucially, on what basis will engagement be deemed to have failed? Again, can the Fund provide examples of where investment has been reallocated or withdrawn on this basis?

Divest WMPF is conscious of the fact that it needs to relay this information to members of the public invested in the Fund and, for this reason, it would be very helpful if the information provided could be in a form that is clear, simple and easily digestible.

‘We are pleased to see a number of oil and gas companies continue to step up their response to climate change. In February 2020 both Rio Tinto and BP pledged to cut their greenhouse gas emissions to net zero by 2050.’

It is true to say that BP has this year adjusted its business model to take account of the future threat of climate change. However, it is imperative that we look closely at the detail of that change and when we do, we can see that their pledge applies only to some of its practises and not others. For example, the changes do not include BP’s 20% stake in Rosneft which makes up 40% of the company’s oil production and 15% of its natural gas.

A report by the Transition Pathway Initiative (TPI), an organisation you cite in your statement, found that BP’s pledge would not cut the company’s emissions by the stated 50% but would in fact result in a reduction of less than 30% by 2050. The same report goes on to confirm that none of the major oil companies align with the Paris Climate Accord. All, on current pledges, will help to ensure that the planet does warm by more than the critical 2 degrees centigrade.

All of which raises the question: Is engagement the most effective route to achieving these shared goals of reducing emissions and safeguarding the future of the planet?

The Financial Prospects

Beyond addressing the questions arising out of the engagement strategy, Divest WMPF would like to briefly list some of the evidence of the financial threats to the fossil fuel sector.

Divestment on Financial grounds

The WMPF Climate Change Statement 2020 clearly acknowledges the threat that the continued extraction and burning of fossil fuels poses to the planet. It does not explicitly state the financial benefits of retaining fossil fuel investments, but we must assume that there are some, at least at present. But in continuing to look ahead to threats posed, Divest WMPF would like to draw attention to where the future financial risk has been clearly recognised by major global institutions that have chosen to divest.

“The reason we sold some $150 million in fossil fuel assets from our endowment was the reason we sell other assets: They posed a long-term risk to generating strong returns for UC’s diversified portfolios.”

Jagdeep Singh Bachher, Chief Investment Officer, University of California[2][3]

Overall, there is little evidence to suggest that a global portfolio invested to exclude fossil fuels would underperform one that included them and such a portfolio might avoid the volatility that is likely to affect the fossil fuel sector in the coming years.

University of Cambridge report which paved the way for their 2020 fossil fuel divestment[4]

Sector share prices

More broadly the fears about the future of the oil industry continue to mount and the impact on share prices is very much in evidence[5] [6]:

‘Both Exxon and Chevron are receding into the rear-view mirror of NextEra Energy Inc. The world’s biggest producer of wind and solar power has now surpassed the oil majors, leading a spectacular rally in power stocks as much of the world shuns fossil fuels to fight climate change.’ 

Bloomberg.com, October 2020[7]

Liz Ann Sonders, Chief Investment Strategist at Charles Schwab & Co, the world’s third largest asset managers, responding to a graph produced by BCA research, said: “Perhaps an understatement to say global oil & gas dividends have collapsed.[8]

Reduced Government subsidies

President Elect Joe Biden’s climate plan includes unprecedented clean energy investments partly funded by “ending subsidies for fossil fuels”.[9] 

A recent report by Vivid Economics found that the UK government underwrites each job within the oil and gas sector to the tune of £250K. The G7 countries provided £70 billion worth of prop ups to the fossil fuel sector in 2016/17 and £80 billion in 2018. In 2016 the G7 countries pledged to phase out oil and gas subsidies by 2025.[10]

Legal challenges

In the US a number of states, including Washington DC, Connecticut, Delaware, Massachusetts, Minnesota and Rhode Island have filed lawsuits against the fossil fuel giants. [11]

“The defendants violated the District’s consumer protection law by concealing the fact that using fossil fuels threatens the health of District residents and the environment.”  

Karl Racine, Attorney General, District of Columbia, US

“a campaign of deception, orchestrated and executed with disturbing success.”

Keith Ellison, Attorney General, Minnesota, US

“We were very conscious about fashioning this lawsuit as a traditional damages action, the only differences here are that the damages are catastrophic.”

Kathy Jennings, Attorney General, Delaware, US.

“As this lawsuit shows, these companies have known for more than 50 years that their products were going to cause the worst flooding the world has seen since Noah built the Ark, and instead of warning us, they covered up the truth and turned our flooding problems into their profits..”

John Tecklenburg, Mayor of Charleston, US

Whilst we don’t yet know the likely impact of these lawsuits, the very fact that they are being filed is surely significant.

The Path Ahead?

With Birmingham City Council and Dudley Council both voting unanimously to divest from fossil fuels, what account has the fund taken of their decision?  Isn’t the WMPF, in retaining these investments, swimming against a very rapidly growing, local, national and global tide of opinion that could simply leave it with stranded assets, in much the same way as the collapse of coal prices did for UK council pensions in 2015, with a loss £683 million?[12]

In a best case, Post Covid 19 landscape, fossil fuels companies will not get back to the same levels of consumption until 2021, or in a worst case, until 2024, according to leading management consultancy firm Mckinsey & Company.  

The World Bank has stated that the energy sector was hardest hit by the current pandemic and  predicts glacial growth in the coming years:  

“Because of COVID-19, the new normal for oil-exporting emerging and developing economies arrived earlier. In the post-COVID world, these countries need to be more aggressive in implementing policies to reduce their reliance on oil revenues.”

Ayhan Kose, World Bank Group Acting Vice President for Equitable Growth, Finance & Institutions and Director for the Prospects Group[13]

Divest WMPF appreciates that the institutional investor sector has been a major advocate and driver of change in this crucial endeavour.  We also understand that Divest WMPF and WMPF managers are hoping for the same results: a planet that avoids the worst effects of catastrophic climate change. But as environmental campaigners we understand the strength of feeling amongst the pension fund holders and see desperation for real, urgent change.  

One simple fact remains: the majority of fossil fuel reserves cannot be put into the atmosphere. There is real power in investment and total investment in renewables needs to dramatically increase to replace the centrality of fossil fuels to everyday living. But with CO2 levels rising and the ill effects and costs from it mounting, instead of dragging a recalcitrant industry of reactionary companies and truculent state actors to comply with the needed reduction, should we not bypass them and redirect investments to solution based companies? Surely the pension fund holders’ preference would be for this rather than for investments that threaten the very futures they are saving for.

[1] https://www.theguardian.com/commentisfree/2020/oct/16/exxonmobil-misled-the-public-about-the-climate-crisis-now-theyre-trying-to-silence-critics

[2] https://www.latimes.com/opinion/story/2019-09-16/divestment-fossil-fuel-university-of-california-climate-change

[3] https://www.cnbc.com/2020/02/10/as-big-endowments-spurn-fossil-fuel-stocks-theres-one-thing-making-this-decision-easy.htm 

[4] https://www.cam.ac.uk/system/files/sm6_divestment_report.pdf

[5] https://www.theguardian.com/business/2020/oct/14/bp-shares-plunge-amid-low-carbon-plan-and-slipping-oil-market

[6] https://ukinvestormagazine.co.uk/bp-shares-dive-to-25-year-low-amid-climate-crisis-fears/

[7] https://www.bloomberg.com/news/articles/2020-10-07/chevron-overtakes-exxon-mobil-as-america-s-largest-oil-company

[8] https://twitter.com/LizAnnSonders/status/1318515810227441665

[9] https://joebiden.com/climate-plan/

[10] https://www.businessgreen.com/news/4021724/report-uk-export-finance-create-jobs-dumps-fossil-fuels-clean-energy

[11] https://www.washingtonpost.com/climate-environment/2020/09/14/states-cities-scramble-sue-oil-companies-over-climate-change/ 

[12] https://www.cnbc.com/2020/02/10/as-big-endowments-spurn-fossil-fuel-stocks-theres-one-thing-making-this-decision-easy.html 

[13] https://www.worldbank.org/en/news/press-release/2020/10/22/impact-of-covid-19-on-commodity-markets-heaviest-on-energy-prices-lower-oil-demand-likely-to-persist-beyond-2021 Published by Google DriveReport Abuse