UK Council Pension Funds Pouring £4 Bn into Companies Expanding North Sea Oil and Gas Production

In a startling revelation, it has come to light that local government pension funds in the UK have poured over £4 billion into companies involved in expanding North Sea oil and gas production. This investigative discovery, exclusively reported by The Bureau of Investigative Journalism (TBIJ), sheds light on a concerning connection between public sector workers' pension savings and the drilling activities in the North Sea.

This collaborative effort between TBIJ and BusinessGreen was made possible through data acquired via freedom of information requests initiated by advocacy groups Platform and Friends of the Earth. These data-driven revelations suggest that UK local authorities have channeled a staggering estimated £16 billion into fossil fuels globally through their pension funds. Alarmingly, a quarter of this substantial sum finds its way into companies bolstering oil and gas production in the North Sea, including industry giants such as Shell, BP, and TotalEnergies.

This implies that a significant portion of the UK's public sector workforce, comprising over six million individuals, is indirectly investing in these companies through their pension schemes. This revelation comes when many councils have publicly committed to achieving net-zero emissions and divesting from fossil fuels. However, the data unearthed today underscores the persistence of substantial investments in oil and gas firms within local government pension portfolios.

It's worth noting that despite widespread concerns about the compatibility of expanding fossil fuel production with the UK's net-zero emissions target and the heightened risks associated with stranded assets, the government remains steadfast in its plan to greenlight more than 100 new oil and gas projects in the North Sea.

The data further underscores the substantial financial backing of local government pension funds to companies like Shell and Equinor. Both these corporations have been actively seeking licenses to advance their oil and gas operations in the North Sea.

Equinor's 80% stake in the Rosebank project, a significant untapped oil field in the UK, has drawn considerable attention. This venture, controversially approved for drilling by the North Sea Transition Authority, holds the potential to unleash a vast quantity of carbon emissions, raising environmental concerns.

In addition, insights from the campaign group Uplift reveal that BP and TotalEnergies are also eyeing expansion in the North Sea and have attracted investments from local government pension funds.

Responding to today's findings, Tessa Khan, executive director of Uplift, called on local government pension funds to shift away from backing fossil fuels altogether, which she said were a risky bet for investors and "incompatible with a habitable planet."

"It is beyond time that pension funds divested from fossil fuels," she said.

TBIJ said it had spoken to several public sector workers with pensions managed by local authorities in the UK who voiced dissatisfaction that their retirement savings had supported oil and gas firms.

Jamie Peters, climate coordinator at Friends of the Earth, said council pension investments should be divested from fossil fuels and instead used to support efforts to accelerate the net zero transition.

"From insulating heat-leaking homes to facilitating mass public transport, councils are key to effective climate action, but this is undermined if local authority pension funds continue to fund fossil fuels," he said. "It's time to ditch financially risky holdings in gas, coal, and oil and invest in accelerating the transformation to a carbon-free future."

Lisa Smart, a Liberal Democrat Councillor in Stockport who sits on the management panel for the Greater Manchester Pension Fund (GMPF), said savers should be given a bigger say in how their money is invested.

"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.

Equinor and GMPF did not respond to TBIJ's requests for comment.

A spokesperson for Shell said it had strong support from its investors for its decarbonisation strategy and was "investing in low carbon energy solutions for the future while reducing our own emissions."

"The vast majority of our investors remain supportive of our strategy to become a net zero emissions energy business by 2050," the Shell spokesperson said.

The Sunrise Project funded TBIJ's reporting. It said that none of TBIJ's funders have any influence over its editorial decisions or output.