Councils gambling on fossil fuels

fossil_fuel_map

Our analysis, based on the 2016 financial year and using a list of the world’s 200 biggest extractors of fossil fuels, shows that Scottish councils currently invest £1,683 million in fossil fuels, 4.8% of the total value of the scheme.[1]

£637 million of this was directly invested by councils, of which £543 million is invested in oil and gas and £113 million in coal. As a handful of companies are both oil, gas, and coal operators these numbers have some overlap. The majority of the funds that councils hold in fossil fuels, £1,046 million, is invested through intermediaries.

The total figure represents a £3,300 stake in fossil fuels for every member of the local government pension scheme.

Divest Scotland Scottish Parliament Pension Scheme Campaign, 24/10/2015: Colombian anti-mining activists Danilo Urrea (right) and Samuel Arregoces. Photography for Friends of the Earth Scotland from: Colin Hattersley Photography - colinhattersley@btinternet.com - www.colinhattersley.com - 07974 957 388
Samuel Arregoces and Danilo Urrea visited Scotland from Colombia to protest investment in BHP Billiton. Image: Friends of the Earth Scotland

Friends of the Earth Scotland previously published an analysis of data from the 2015 financial year[2] and found that Scotland’s local councils were investing £1,664 million in fossil fuels.

Our new analysis includes more data and uses a more sophisticated method of estimated indirectly held funds. Nonetheless the comparison between these two totals is remarkable. Whilst global governments signed a UN treaty on climate change, described by First Minister Nicola Sturgeon as a “historic agreement [that] sends a signal of certainty about the global economy’s low carbon future” and by others as “heralding the end of the fossil fuel age”,[3] Scotland’s local governments continued to invest heavily in the companies most responsible for climate change.

BHP Billiton

BHP Billiton is one of the world’s largest mining companies and 12th largest extractor of coal globally[4]. It has been listed as one of the companies most singularly responsible for climate change. The company is currently mining in the centre of the Borneo rainforest and is facing prosecution over Brazil’s worst ever environmental disaster, when a dam holding back waste water from an iron ore mine broke in 2015. The company is accused of bribery in the US and China. Samuel Arregoces (pictured) was evicted from his home to make way for the expansion of one of the world’s largest open-cast coal mines, a joint venture of BHP’s in Colombia. He came to Scotland in 2015 and said “the story of coal mining in Colombia has been 30 years of destruction, 30 years of pain.”[5] Scottish councils invest £19.5 million directly in BHP Billiton.

bp_deepwater_horizon___us_coast_gaurd
The Deepwater Horizon disaster led to BP being given the largest environmental fine in US history. Photo by the US Coast Guard.

BP

BP are a supermajor, one of the world’s six largest non-state owned oil and gas companies. Fleetingly branding themselves beyond petroleum they have shed their renewable businesses in recent years in favour of new investment in deep sea and arctic drilling, highly-polluting tar sands developments, and fracking. BP have campaigned against subsidies for renewable energy and have close ties with the oppressive regime in Azerbaijan. They were fined $18.7 billion, the largest environmental fine in US history, for the “gross negligence” regarding the 2010 Deepwater Horizon spill which devastated the Gulf of Mexico.[6] Scottish councils invest £64 million in BP.

Fossil fuel investments by council pension fund

Fund name Fund value

(£ ‘000)

Direct in Oil and Gas Direct in Coal Direct in Fossil Fuels Indirect in Fossil Fuels Total in Fossil Fuels %
Dumfries & Galloway 692,148 20,611 20,611 49,877 70,488 10.2%
Falkirk 1,837,451 59,303 19,244 73,012 46,572 119,585 6.5%
Fife 1,853,629 11,122 1,127 11,479 78,136 89,615 4.8%
Highland 1,469,269 36,168 6,733 40,472 51,854 92,326 6.3%
Lothian 5,978,577 92,066 2,097 94,164 10,118 104,282 1.7%
North East 3,268,036 51,112 16,316 63,622 60,497 124,119 3.8%
Orkney 265,949 5,446 1,087 6,113 2,125 8,238 3.1%
Scottish Borders 542,570 5,470 3,475 8,576 14,807 23,383 4.3%
Shetland 375,707 30,830 30,830 8.2%
Strathclyde 16,242,149 194,633 51,468 246,101 643,654 889,755 5.5%
Tayside 2,900,207 67,353 11,745 72,957 58,144 131,101 4.5%
TOTALS 35,425,692 543,284 113,291 637,107 1,046,182 1,683,289 4.8%

Note that although some councils manage their pension fund not just for their own council area but also on behalf of neighbouring areas, namely:

  • Falkirk operate their pension fund on behalf of Stirling and Clackmannanshire.
  • Highland operate their pension fund on behalf of Comhairle nan Eilean Siar (Western Isles).
  • Lothian is operated by the City of Edinburgh Council on behalf of East Lothian, West Lothian and Midlothian.
  • North East is operated by Aberdeen City Council on behalf of Aberdeenshire and Moray.
  • Strathclyde is operated by Glasgow City Council on behalf of East Ayrshire, North Ayrshire, South Ayrshire, North Lanarkshire, South Lanarkshire, Renfrewshire, East Renfrewshire, Inverclyde, East Dunbartonshire, West Dunbartonshire and Argyll & Bute.
  • Tayside is operated by Dundee City Council on behalf of Angus and Perth & Kinross.

Top 10 fossil fuel companies

Company name Amount Scottish councils have invested (£ ‘000) Company description Local government pension fund investors
Royal Dutch Shell 129,936 Oil and gas company Lothian, Highland, Fife, Strathclyde, Tayside, Falkirk, Orkney, North East, Dumfries & Galloway, Scottish Borders
Rio Tinto 74,107 Coal company Strathclyde, Orkney, Scottish Borders, Fife, Highland, Tayside, Lothian, North East
BP 63,977 Oil and gas company North East, Strathclyde, Falkirk, Tayside, Lothian, Highland, Dumfries & Galloway
Exxon Mobil 44,008 Oil and gas company Strathclyde, Highland, Lothian, Fife
EOG 40,661 Oil and gas company Scottish Borders, Orkney, North East, Strathclyde, Falkirk, Tayside, Highland, Fife, Lothian
Eni 31,474 Oil and gas company Strathclyde, Lothian
Centrica 27,964 Oil and gas company Fife, Lothian, Falkirk
Total 25,783 Oil and gas company North East, Lothian, Tayside, Highland, Strathclyde
Apache 20,047 Oil and gas company Scottish Borders, Strathclyde, Tayside, Highland, Lothian, Fife, Orkney
BHP Billiton 19,467 Oil, gas, and coal company Orkney, Scottish Borders, Fife, North East, Falkirk, Tayside, Highland, Falkirk

A complete list of fossil fuel companies which have received investment from Scottish council pension funds along with our methodology is listed here.

Notes

[1] Methodology and data sources are detailed here.

[2] Local Government Pensions, Fossil Fuels, and the Transition to a New Economy (2015): http://reinvest.scot/wp-content/uploads/2016/09/Local_Government_Pensions_and_Fossil_Fuels.pdf

[3] Sources:

http://www.bbc.co.uk/news/uk-scotland-scotland-politics-35087241

http://www.businessgreen.com/bg/blog-post/2469692/the-superlatives-are-justified-paris-agreement-ratification-could-herald-the-end-of-the-fossil-fuel-age

https://www.theguardian.com/environment/2015/dec/12/paris-climate-deal-200-nations-sign-finish-fossil-fuel-era

[4] Data obtained from the Carbon Underground 200, correct as of 16 March 2016.

[5] Read more about BHP Billiton on the Friends of the Earth Scotland blog: http://www.blog.foe-scotland.org.uk/index.php/2015/12/where-your-money-goes-the-toxic-toll-of-bhp-billiton-in-borneo-and-colombia/

[6] For more information about BP read the Friends of the Earth Scotland blog: http://www.blog.foe-scotland.org.uk/index.php/2015/11/where-your-money-goes-bp-corruption-spills-and-gross-negligence/

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