Another attack on local democracy?
Divestment campaigners are worried that the government's current consultation on local authority pensions investment contains a significant attack on local democracy and ethical investment.
The main purpose of the proposed new rules will be to require local authorities to be more cost-effective by pooling their pension funds in larger groupings. But within the consultation are explicit restrictions on local authority ethical investment decisions. The main intent appears to be of companies operating within the illegal settlements in the West Bank.
Divestment from the UK arms industry would also be forbidden: "using pensions and procurement policies to pursue boycotts, divestments and sanctions against foreign nations and the UK defence industry are inappropriate" ( in 2007 revealed local council pension funds to have over £300 million invested in BAE alone).
It is acknowledged that local authorities may have regard to "environmental, social and corporate governance matters". But when the government is seeking to restrict local authorities' investment choices to prevent disinvestment in some areas, it is hard to be confident that restrictions on fossil fuel divestment will not follow within guidance (as yet unpublished). If local authorities have to stick to central government policy and invest in UK arms companies, will government be any keener to allow them to divest from fracking? New regulations would give the Secretary of State the power to intervene if a local authority is deemed not to be following government guidance.
It has been calculated that local authorities' pension funds have altogether £14 billion invested into fossil fuel companies. Under pressure from local campaigns, some have taken the first steps towards divestment. council will make no further direct investments in fossil fuel companies. pension fund committed to divest from coal and tar sands companies, to divest from coal and invest a third of its funds in a low-carbon fund, and neighbouring are reviewing their fossil fuel investments. As global divestment campaigning has now led to divesting, fully or partially, from fossil fuels, many more councils are expected to join these.
Alongside this, local councils can make positive investment decisions, for example in low carbon infrastructure such as locally owned renewable energy or public transport - .
But will new restrictions put a brake on this?
The government's consultation states that in formulating their policies on investment and environmental, social and corporate governance matters, local authorities' "predominant concern should be the pursuit of a financial return on their investments". As Mark Carney, Governor of the Bank of England, , the financial system has not responded adequately to threats posed by climate change, such as stranded assets in unburnable fossil fuels (the 'carbon bubble') partly because such risks are seen to be in a future beyond the normal business (and political) cycle. If any investments are obliged to take account of these long-term risks, it should be pension funds.
The is open until 19 February. Several organisations have put together a to allow you to submit a quick response. If you are able to spend a few minutes writing a response to the consultation in your own words (send to ) stressing the importance of democratic investment decisions made locally on ethical grounds in relation to fossil fuels as well as human rights, arms trade, and other issues of concern, this would have greater weight.
Please share widely with friends and networks - particularly those whose own pensions will be affected.
Why do we say this is 'another' attack on local democracy?
The government's localism rhetoric seems to be wearing thin when councils fail to endorse fracking in their area. David Cameron gave reassurances last summer that "decisions must be made by local authorities in the proper way, under the planning regime we have," but a few months later the Secretary of State announced that he was prepared to on fracking. And a recently revealed plans to , putting them in the hands of planning inspectors instead.
This follows previous measures to . These are in stark contrast to placed on local authorities to make it much more difficult for them to approve onshore wind. It seems that only one of these industries is deemed 'in the national interest' - unfortunately it is the one which is a threat to our climate.