Fossil Free Hastings has drafted the following model divestment resolution, a variant of which it is hoping to have voted on at Hastings Borough Council’s full council meeting on Wednesday 13 April (6pm @ Hastings Town Hall, Queens Square Hastings East Sussex TN34 1TL). Please put this date in your diary now and check-back later this month for more info. Thanks to Thad Skews for his artwork!
MODEL DIVESTMENT MOTION FOR HASTINGS BOROUGH COUNCIL
Hastings Borough Council recognises that:
Fossil fuels (coal, oil and gas) have played a central role in the world’s economic, social and technological development over the last 150 years but their continued use poses a serious risk to the stability of the climate upon which our well-being and economy depend. Climate change endangers the health of local residents in Hastings, both directly through extreme weather events and indirectly through impacts on food systems and global security.1
Scientists have estimated that at least half of the world’s proven fossil fuel reserves will have to remain unburnt if we are to have a 50% or better chance of keeping global warming to less than two degrees Celsius2 – a dangerous threshold that world leaders at the 2009 Climate Summit recognised should not be crossed.3 Moreover, even the 2 degrees ‘target’ now appears to be much more dangerous than was previously believed, with the December 2016 UN Climate
Summit agreeing ‘to pursue efforts to to limit the temperature increase to 1.5 degrees Celsius above pre-industrial levels, recognising that this would significantly reduce the risks and impact of climate change’.4 A rapid large-scale shift away from fossil fuels towards energy efficiency and alternative sources of energy is therefore needed to avert catastrophic climate change.
Trustees of pension funds and others responsible for investment decisions have a fiduciary duty to consider the environmental and social risks relating to their investments, including climate risks, and to adopt strategies to minimize those risks.5
As the investment risks associated with climate change are better understood, the fossil fuel reserves of energy companies could become ‘stranded assets’ – assets with little or no value – representing a substantial risk for those that invest in them, including pension funds, organisations and individuals.
HSBC has ‘warned that 40-60% of the market capitalisation of oil and gas companies [is] at risk’ from this so-called ‘carbon bubble’6, and, as of 2014, almost 70% of the UK’s largest
occupational pension funds reported that they consider climate change a material risk to their assets.7 East Sussex County Council currently has £172m of local people’s pensions invested in the oil, coal and gas industries.8
To date, over 500 institutions representing over $3 trillion in assets have committed to divest from fossil fuel companies, including the Rockefeller Brothers Fund, the World Council of Churches, Oxford City Council, the British Medical Association and the City of Oslo.9
In response to this Hastings Borough Council pledges:
- to develop and implement a Responsible Investment Policy through which it will: (a) divest from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds within 5 years; and (b) set out an approach to quantifying and addressing climate change risks affecting all other investments.
- to work with other District and Borough councils in East Sussex to encourage and assist them to adopt Responsible Investment policies with the same scope.
- calls on both East Sussex County Council and the East Sussex Pension Fund to divest from fossil fuels by developing and adopting Responsible Investment policies with the same scope.
1Climate Change 2014 Synthesis Report Summary for Policymakers, Intergovernmental Panel on Climate Change, https://www.ipcc.ch/pdf/assessment-report/ar5/syr/AR5_SYR_FINAL_SPM.pdf
2Figure based on M. Allen et al., ‘Warming Caused by Cumulative Carbon Emissions Towards the Trillionth Tonne’, Nature, 2009, http://bitly.com/allen-2009; World Energy Outlook 2012, International Energy Agency. Cited in Mike Berners-Lee & Duncan Clark, The Burning Question (Profile, 2013), p. 32.
3In the non-binding ‘Copenhagen Accord’ issued at the end of the 2009 UN Climate Summit (COP19), ‘The Heads of State, Heads of Government, Ministers, and other heads of delegation present’ noted that ‘To achieve the ultimate objective of the Convention to stabilize greenhouse gas concentration in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system, we shall, recognizing the scientific view that the increase in global temperature should be below 2 degrees Celsius … enhance our long-term cooperative action to combat climate change.’ (http://unfccc.int/resource/docs/2009/cop15/eng/l07.pdf).
4Michael E Mann, ‘Defining dangerous anthropogenic interference’, Proceedings of the National Academy of Science of the United States of America, 17 March 2009, http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2657409/ ; ‘Paris climate deal: key points at a glance’, Guardian, 12 December 2016, http://www.theguardian.com/environment/2015/dec/12/paris-climate-deal-key-points
5Fiduciary Duties of Investment Intermediaries, Law Commission, 2014. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/325509/41342_HC_368_LC350_Print_Ready.pdf
6‘Carbon bubble will plunge the world into another financial crisis – report’, Guardian, 19 April 2013, http://www.theguardian.com/environment/2013/apr/19/carbon-bubble-financial-crash-crisis
7Perspectives, Policies & Problems: Pensions funds on climate change in their own words, ShareAction, March 2014, http://shareaction.org/sites/default/files/uploaded_files/PPPreportFINAL.pdf
8‘REVEALED: UK Councils have £14 billion invested in fossil fuels’, Fossil Free UK, 24 September 2015, http://gofossilfree.org/uk/revealed-uk-councils-have-14-billion-invested-in-fossil-fuels/. The £172m figure is based on data collected through Freedom of Information Requests (FOIs) to administering authorities for the 2013/14 financial year. It includes direct equity holdings in the top 200 fossil fuel companies as well as estimated fossil fuel investments in pooled equity funds.