23.10.23 Environment

£4bn in UK public pensions funding North Sea oil giants drilling new wells

Pension funds used by millions of council workers in the UK are pouring cash into companies expanding offshore oil and gas extraction

Public sector workers in the UK are inadvertently funding companies drilling new oil wells in the North Sea to the tune of more than £4bn, an analysis by the Bureau of Investigative Journalism (TBIJ) has found.

Data released today by two campaign groups, Platform and Friends of the Earth, calculated that UK local authorities have invested an estimated £16bn in fossil fuels worldwide. A quarter of this is backing companies expanding oil and gas production in the North Sea, including Shell, BP and TotalEnergies.

In July, Rishi Sunak announced plans to grant more than 100 new licences for North Sea oil and gas, despite a warning by the International Energy Agency in 2021 that there should be no new fossil fuel developments.

More than 6 million people in the UK have retirement savings in local government pension schemes, including local councillors, council workers and some school staff.

Local government pension funds have more than £2.3bn invested in Shell, according to Platform and Friends of the Earth, who acquired the data through freedom of information requests.

These schemes also have more than £300m in Equinor, which owns 80% of the new Rosebank oil field. Rosebank is one of the UK’s largest untapped oilfields, and last month drilling on the site was authorised, an act the Green MP Caroline Lucas called “the greatest act of environmental vandalism in my lifetime”.

Among the other companies expanding North Sea operations are BP and TotalEnergies, according to an analysis of Rystad Energy data by Uplift, a campaign group that wants a fossil fuel-free UK.

Tessa Khan, executive director of Uplift, told TBIJ: “It is beyond time that pension funds divested from fossil fuels,” investments she said were not without risks and “incompatible with a habitable planet”.

Alix Otten, a retired adult support worker who draws her pension from the Greater Manchester Pension Fund (GMPF), is angry with the way her pension pot has been invested. “I absolutely hate it, I feel dirty, actually feel dirty, that I’m living off that kind of money,” Otten told TBIJ.

Otten has protested urging GMPF to divest from fossil fuels. “The whole idea of public service is that you are doing good. The idea that our pensions are invested in something very, very harmful is such a contradiction morally,” she said.

Despite strong climate commitments made by many public sector pension funds – and some councils voting to divest from fossil fuel companies – vast sums remain invested in fossil fuels across the globe.

Giles Gooding has been contributing a share of his wages to Hampshire Pension Fund for about 10 years and, like Otten, has called on his local council, Hampshire, to divest from fossil fuels. He said: “It could be a good investment to move away from fossil fuels. There is going to come a point when they are toxic, and the value of them will reduce.”

Both Otten and Gooding have argued that the members of a scheme should have a say in how their money is invested. “Why don’t they contact all their pension holders and ask them?” Otten asked.

Lisa Smart, a Liberal Democrat councillor in Stockport who sits on GMPF’s management panel, agrees. “I think the pension fund could and should do more to engage pensioners and pension fund members in what’s being invested in their name,” she said.

Hampshire Pension Fund told TBIJ: “We believe that there are significant climate change mitigation benefits that come from engaging as a shareholder with fossil fuel companies. Simply disinvesting from fossil fuel companies is not a straightforward solution to tackling climate change.” It added that, as of the end of 2022, 2.6% of the fund was invested in fossil fuel companies and 3% in renewable energy.

A Shell spokesperson told TBIJ: “The vast majority of our investors remain supportive of our strategy to become a net-zero emissions energy business by 2050.” It added that it was “investing in low carbon energy solutions for the future while reducing our own emissions.”

Equinor and GMPF didn’t respond to requests for comment.

Note: This article was updated October 24 2023 to include a late response from Hampshire Pension Fund.

Reporters: Grace Murray, Josephine Moulds and Nimra Shahid
Environment editor: Robert Soutar
Deputy editor: Chrissie Giles
Editor: Franz Wild
Production editor: Frankie Goodway
Fact checker: Chrissie Giles

This reporting is funded by the Sunrise Project. None of our funders have any influence over our editorial decisions or output. This story was produced with the support of the Pulitzer Rainforest Investigations Network.