Sadiq: Real Divestment Now

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Sadiq: Real Divestment Now

In 2016, Sadiq Khan promised Londoners he would divest the London Pension Fund Authority (LPFA) from fossil fuels. Now the Mayor's office and the LPFA are unveiling a new investment policy which will effectively break that promise.

The new ‘divestment’ policy is full of loopholes that allow fund managers to give a pass to top polluters like Shell and BP. It’s really a policy of engagement, not divestment. The LPFA and City Hall think they can persuade fossil fuel companies to keep their reserves in the ground. We know this doesn’t work.

As the USA prepares to exit the Paris Agreement, and the UK government aligns itself with the climate-denying DUP, we need climate leadership from our city. Mayor Khan has vowed to tackle dirty air, now he needs to keep his promise and tackle London’s dirty investments.

Other leading cities like Berlin and Copenhagen have already made much stronger divestment commitments. Why can’t London?

We are calling on Mayor Khan and the Chair of the LPFA, Sir Merrick Cockell, to commit to real action -- use this letter tool to write to them outlining why you support divestment and why this new policy isn't good enough.

Tell Mayor of London Sadiq Khan to keep his election promise and take real action to divest the London Pension Fund from fossil fuels.

Dear Mayor Khan and Sir Merrick Cockell,

I am writing to you as a concerned London citizen to ask that you swiftly and fully enact the 2016 manifesto promise to divest the London Pension Fund Authority from all fossil fuels.

The policy currently being advocated by the Mayor's Office and the LPFA Board includes many loopholes through vaguely-defined caveats around ‘ignoring climate risk’ and ‘engagement’ that give a get-out clause to investment managers and prevent any meaningful change in the portfolio.

For example, only companies ‘ignoring the risks of climate change’ are included in the divestment policy, with no definition of what this means. Most of the companies doing the worst damage to the climate do have climate change policies (however toothless) and could be defined as not ignoring these risks. Therefore companies like Shell and BP could still receive a pass from LPFA fund managers.

Furthermore, the insertion of “active” before investments allows the LPFA to continue to hold passive managed funds, money from which could still end up with fossil fuel companies and projects, such as the Dakota Access Pipeline. The policy also refers primarily to ‘new’ investments. While avoiding future investments is important, it is the dumping of current assets that defines divestment, and is required to prevent the worst effects of climate change.
 
In reality, this policy is an ‘engagement’ policy. We know that to avoid catastrophic climate change we need to leave 80% of fossil fuels in the ground. The idea that the LPFA will manage to persuade oil and gas companies like Shell and BP to stop burning fossil fuels is far-fetched. It hasn’t worked for the last thirty years, and won’t work in future. Just last week for example, Shell shareholders widely rejected a proposal to set and publish annual targets to reduce carbon emissions.

The LPFA argues that engagement with companies as active shareholders is a more effective means of influencing their business models than divestment. But its record here is disappointing: in 2010, the LPFA voted in favour of tar sands extraction, and later challenges focused only on the water use involved, not climate change. Moreover, the policy fails to define what specifically constitutes engagement or how the efficacy of engagement efforts can be judged, giving "all talk, no action" a limitless timeline.

This engagement policy is not the divestment that Sadiq Khan promised to work towards when elected Mayor of London in 2016. At a time when key national governments are faltering, with the US pulling out of the Climate Accords and the UK Government aligning with the climate-denying DUP, we need London’s leadership on climate more than ever before.

Divestment sets a clear line in the sand that our city won’t accept the financial and environmental risks of continued investment and entrenchment of fossil fuel exploration and infrastructure.

We therefore urge you to amend the policy to deliver genuine divestment: to immediately freeze any new investment in fossil fuel companies, and divest from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds within 5 years.
 
Yours sincerely,

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Sadiq: Real Divestment Now

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