Tuesday, 22 September 2015

Ethical Investments

Update 24th September; Coincidentally, The Ecologist has surveyed all UK councils to determine the pension investments in fossil fuels. The grand total is £14bn and this interactive map shows that the Dyfed Pension Fund invests directly and indirectly, £141.3m.


One news story which pops up every now and again questions whether the investments made by public sector pension funds are entirely appropriate. ITV Wales reports today on the pension fund which covers Assembly Members with investments in tobacco and gambling companies, 'possible' fracking companies and Burberry Group. The issue over Burberry was that Assembly Members had campaigned to try and stop the closure of its Treorchy factory in 2006 with the loss of 300 jobs, without success.

Closer to home, the Dyfed Pension Fund, administered by Carmarthenshire County Council, has much the same type of investments including around £15m in Imperial Tobacco and British American Tobacco, and £3m in BAE Systems and Quinetiq, both of which manufacture weapons. Other investments include William Hill, 888 and Betfair, and not forgetting Burberry which pops up again at £1.5m. Drug companies, mining, oil and and mineral extraction groups, which includes £7m in Rio Tinto Plc, all feature in the list.

There is nothing illegal in any of this of course but the problem for government bodies, and particularly when elected members are part of the scheme, is the conflict between their stated aims and the nature of the investments. For example, councillors have spoken out in the past against the proliferation of online gambling sites yet the pension fund, administered by the council, invests heavily in at least three.

In another example, the council leader gave a statement at the last council meeting welcoming refugees fleeing war, yet the pension fund invests in weapons manufacturers. Concerns over social exploitation and environmental impact will naturally concern elected members but not, it seems, the fund they pay into, nor administer.

I don't think the Dyfed Pension Scheme, nor the Assembly scheme are unique, each hold a portfolio of investments which are typical of pensions funds everywhere. Good returns (and, understandably, the prospect of a good, secure pension) will always outweigh ethical, environmental or social issues. So the Dyfed Pension Scheme is probably not alone in paying little more than lip service to these considerations;

"The Pension Panel recognises that social, environmental and ethical considerations are among the factors which investment managers will take into account, where relevant, when selecting investments
for purchase, retention or sale..."
(Statement of Accounts, Dyfed Pension Fund)


Anonymous said...

Would you be prepared to support a significant increase in Council Tax to subsidise employer's contributions into the local authority's pension fund, if it meant that the Council reinvested in more ethical, but less financially attractive, investments?....I think not.

Anonymous said...

To look at the figures in detail, you discover Carmarthen Council has 9 and a half million in Diageo!