With parliament gridlocked, divestment is a creative approach to climate action
In case you haven’t heard, the UK is in a political crisis. Parliament has come to a Brexit standstill, and any resolution will be fraught with unrest. Recent polling from the Hansard Society found that public faith in the political system is at a low, with feelings of powerlessness rife.
British environmental politics has not escaped this quagmire. Key pieces of legislation that were once sources of optimism for a green Brexit are frustratingly stuck in unsatisfactory form in their progression through parliament. To salvage her legacy, Theresa May could legislate for the CCC’s net-zero target, but that would require the cabinet consent that she has found so elusive during her tenure.
Meanwhile, demonstrators have hit the streets with a cacophony of demands for action on the looming environmental crisis. From the radical Extinction Rebellion to the inspiring school strikers, calls for improved environmental governance are loud and clear. The public have followed their lead: 76 per cent would now switch their vote to protect the planet or climate. Evidently, a gulf is opening up between what is asked of parliament and what they are willing to do under current conditions.
So, if the government won’t bring about the changes needed to solve the environmental emergency that parliament itself has declared, the time has come to go in search of alternative vehicles to avert the crisis.
Luckily, the public has readily accepted the challenge, coming together to move large pots of institutional capital away from fossil fuel investments and into low carbon alternatives. Pressure from students, academics and staff have led nearly half of the UK’s universities to divest away from fossil fuels, council workers in places like Derby and Monmouthshire have divested their pensions, and faith institutions such as the Church of England have followed suit.
These decisions were made democratically, with many voted on by governing bodies following bottom-up pressure from institution members. All have collectively realised the two-fold risk of pitting their future economic prosperity against the future of the planet. There are alternative rationales that support action:
- Continuing to invest in fossil fuel companies while taking action to limit global warming to two degrees means the majority of extant fossil fuel reserves will go unburned. The associated assets would rapidly devalue (recent estimates find fossil fuels could lose 95 per cent of their value by 2050) and funds people have worked their entire lives to build would be hit.
- Alternatively, continuing to invest in fossil fuel companies and not taking action to limit global warming will lead to unravelling of the Earth’s support systems and cause losses that would far exceed the gains of remaining investments (and, frankly, there would be bigger problems to deal with).
Retrospective analysis has even shown that divesting from 1990-2017 would have had no significant difference on a fund’s performance. Jeremy Grantham, founder of the eponymous institute, has called this “the mythical peril of fossil fuel divestment”, so why not harness the long term perspectives and sizable endowments of these institutions to build a sustainable future?
This is the concept behind the pensions minister Guy Opperman’s recent article in The Times, in which he argues that pensions should be harnessed to fight the climate emergency. Politicians themselves have cottoned on to the potential of pension funds, and last week came together to debate the merits of divesting pensions from fossil fuels and reinvesting in environmental solutions. Not as members of parliament, but as members of the same pension fund, over 250 are united in their call to Divest Parliament. Government ministers, the shadow front bench, the chair of the Committee on Climate Change, all but two SNP MPs, and members of the DUP are together in this regard. Ed Davey MP, host of the debate, called on this remarkable coalition of the willing to have their pension fund “demonstrate the beautiful truth that long term measures to mitigate climate change and long term investment strategies are not incompatible. Far from it. In fact, they can form a fabulous virtuous circle, and one that I hope will be beneficial to us all.”
Pensions regulations in the UK are as such that a fund’s trustees can account for the ethical and environmental concerns of members if there is no significant detrimental financial impact. So all eyes are now on the parliamentary pension fund’s trustees in their search for low carbon alternatives.
In a time of partisanship and parliamentary futility, these MPs are acting in a personal capacity, putting their professional grievances aside, and demonstrating the strength of a different kind of democratic process in responding to climate breakdown. They, along with thousands of other people across the country, are inviting a more creative approach to change. The dual political and environmental crises we face necessitate it.