Speech by Andy D’Agorne in favour of the pension motion to Council

At the Council meeting on 22 March 2021 there was a motion to council on using the Council Pension Fund to support sustainable development.[1] Councillor Andy D’Agorne said the following:

I very much support this motion, highlighting the role of pension funds in the urgent financial transition to a low carbon economy, and I welcome the acceptance of the Green amendment.

As someone who has spent their working life in jobs which provide a local government pension, I recognise that most council staff trust the pensions authority to make wise investments to secure their future pension, but many also want to see an ethical basis underpin those decisions. Actions in this motion are of critical interest to council employees as well as contributing to our ambitions to achieve zero carbon as quickly as possible.

The potential for stranded assets’ is a theme which outgoing Bank of England Governor Mark Carney sees as central to his new role as Finance Adviser to Boris Johnson in the run-up to the COP 26 climate summit in November, as well as UN Special Envoy for Climate Action and Finance.

Announcing this new role in January, the government stated:

“Banks, pension funds and insurers have a huge role to play in directing investment to tackle climate change. But this requires significant changes in behaviour and considerable new investment – Mr Carney will advise on how we can achieve both.”

So just to explain further, Stranded assets are those which will turn out to be worth less than was anticipated at the time of the investment decision, because of changes, driven by the urgent energy transition from fossil fuels to renewables.

In his role as chair of the Financial Stability Board Task Force on Climate-related Financial Disclosures, Mark Carney, has stated that a carbon budget consistent with the Paris Agreement target to limit global warming to 2 degrees C “would render the vast majority of reserves ‘stranded’ — oil, gas and coal that will be literally unburnable, without expensive (and I would add unproven) carbon capture technology”

Carbon Tracker has been working for a decade, demonstrating risks to viability of fossil fuel producers as we move towards such targets to stabilise global temperatures.

The Task Force led by Mark Carney now has 1200 of the worlds largest companies signed up to reporting against their metrics with this being a top priority for the UK and other G20 governments to make mandatory after COP 26. Investors can compare, invest where the solutions are, and preserve and manage future risks. The UK, New Zealand, and Switzerland have announced their intention to make this reporting mandatory.

The direction and the imperative to switch investments from grey to green is clear. Please support this motion.

[1] Motion to Council, including Green amendment

“Council notes:

  • More and more pension funds are divesting from fossil fuels both in the UK and across the world. Globally $14.56 trillion is now committed to divestment. It is clear that pension funds across the UK and around the world no longer view fossil fuel production as a wise or a long term investment with increased awareness of the potential for these to become ‘stranded assets.
  • The York and North Yorkshire Pension fund still has holdings in fossil fuels, thought to be around £33 million in total. 
  • On 5th March 2021 the York & North Yorkshire Pension Fund signed up to a new strategy, which would see the reduction of the fund’s holdings in equities from 57% to 50%, and the creation of a new investment portfolio in infrastructure (10% or £450 million of the total fund). The fund’s new strategy commits to investing £200 million in infrastructure this year. 
  • City of York Council declared a climate emergency in March 2019 and is currently drawing up a zero carbon pathway to deliver a zero carbon York.
  • City of York Council and North Yorkshire County Council have declared the joint ambition to become the country’s first carbon negative region.  Council is working with the Local Enterprise Partnership (LEP) and North Yorkshire County Council to bring to life our Zero Carbon Strategy for the region, recognising both the strategic value of doing this and the significant positive benefit in terms of developing new skills and jobs.

Council commends this change in strategy and the Pension Fund’s decision to support sustainable infrastructure.

Council believes that investment in green infrastructure is one of the keys to transition to a zero carbon future and the creation of green jobs.

Consequently, Council resolves:

  • To call on the York and North Yorkshire Pension Fund to commit to invest £120 million of the infrastructure portfolio in green infrastructure, to be split equally between the region, the UK, and global projects.”
  • To welcome the increased awareness of pension fund managers of the urgent need to move all holdings away from fossil fuels to avoid the potential impact of ‘stranded assets’ on future performance of their funds.  
  • To raise awareness of the content of this motion among council employees (who are mostly contributors to the N Yorkshire Pension Fund) to ensure they can be more engaged with decisions affecting their future pensions.”

Leave a comment