About the project
Just under seven million people in the UK rely on local government pension funds to provide them with an income when they retire. As with the vast majority of investments around the world, there has not always been great consideration of the impact these investments have on wider society.
The climate crisis is forcing workers, investors, policy-makers and the general public to reconsider, to look at what their money is doing in their name, and to withdraw their investments from the most harmful companies on the planet so that we can help to finance a local green recovery instead.
Local grassroots campaigns across the UK, with the support of Platform, Friends of the Earth England, Wales and Northern Ireland (EWNI), and Friends of the Earth Scotland alongside countless other organisations, have been driving this effort at a local authority level for the last few years.
Our research reveals that local government pensions hold investments of nearly £16 billion in fossil fuels, including £8 billion in companies involved in new oil and gas exploration.
That is £2,306 invested in fossil fuels for each of the nearly 7 million members of the Local Government Pension Scheme in the UK.
The research reveals a variance in approach to fossil fuel investment across UK local government pensions. In London, where local leadership has taken sustained action on fossil fuel divestment, investment by local government pension funds is nearly half the national average.
Just 10% of funds hold over 50% of LGPS fossil fuel investments - with Greater Manchester Pension Fund & West Yorkshire Pension Fund each investing over £1 billion into fossil fuels.
By contrast over 20% of local councils now invest less than 1% of their fund into fossil fuels - a 10 fold increase since 2020, the last time analysis was conducted.
Pension funds in England were found to invest nearly 4% of their fund into fossil fuels, compared to just 2% in Wales and London.
Two funds with the lowest proportion of their investments in fossil fuels also came from Wales - reflecting the Welsh Government’s support for fossil fuel divestment in 2022
The Data on UK LGPS investments was collected by sending Freedom of Information (FOI) requests to all UK LGPS pools and schemes. Where data was not provided by LGPS, we analysed publicly available documents including Annual Reports & pension fund committee meeting minutes to fill data gaps. Data collected represents 75% of the total UK LGPS.
For all UK LGPS investments, we prioritised collecting financial identifiers for each fund. We then searched these funds in Refinitiv, and downloaded all holdings of these funds as of 31/03/2022. Where full holdings were not available at that date, we downloaded all holdings as of the nearest date available. Where full holdings were not available, we downloaded top 10 holdings and assigned the rest as ‘N/A’.
All holdings were then screened for fossil fuel exposure, as defined by Urgewald in their ‘GCEL & GOGEL’ lists, as outlined below.
Data on coal-producing companies was collected from the Global Coal Exit List (GCEL). The GCEL database provides data on 90% of the world’s thermal coal production and coal-fired capacity.
Oil and gas companies
Data on upstream oil and gas companies was collected from the Global Oil and Gas Exit List (GOGEL). The GOGEL database provides data on 900+ oil and gas companies and covers 95% of oil and gas production, 97% of oil and gas short-term upstream expansion and 95% of capital expenditure (CAPEX) on oil and gas.
The UK LGPS investments were screened for fossil fuels by matching International Security Identifiers (ISINs) for each asset to fossil fuel companies in the GCEL and GOGEL databases. ISINs are 12-digit codes which are used to uniquely identify public investment such as equities and bonds traded on global stock exchanges. If assets did not have an ISIN, they were excluded from the analysis.
The fossil fuel value of each asset was calculated as the asset value if it matched a company in the GCEL or GOGEL databases. The method did not consider how much revenue that the company derived from fossil fuels, so may overestimate diversified fossil fuel companies, such as BHP and Mitsubishi.
This research relied on transparent data being made available. If an LGPS did not provide data in a transparent manner, and we were unable to find information about its holdings on easily publicly available sites, we were unable to screen its assets for fossil fuels.
Furthermore, we were largely unable to screen any holdings in private equity for exposure to fossil fuels. These assets often contain fossil fuel investments. As such, we are likely to under-report exposure to fossil fuel investments in these asset classes.
Comparison to previous research
Previous iterations of this research undertaken in 2015, 2017 and 2021 all used the Carbon Underground 200 list as their reference point for defining a ‘fossil fuel company’. Because this research uses GOGEL & GCEL - findings may not be directly comparable.
In particular, the inclusion of midstream oil and gas companies poses a distinctly different data point. We mitigate against this difference by calculating the financed emissions of fossil fuel assets held, as showcased in the data.
Thanks is due to the following organisations and individuals in compiling this dataset:
To Refinitiv, for providing access to holdings information that enabled our screening.
To Urgewald, for providing access to GOGEL & GCEL, and assisting the development of our methodology.
To analyst Oliver Wills, without whom this project would not have been possible.
To data researchers Ed Jones, Jan Goodey & Nicole Pihan - whose tireless work collecting and cleaning LGPS data enabled this analysis to occur.
To our funders, in particular the Climate Change Collaboration.
To Common Knowledge, who built the web page you are using now!
And finally, to the hundreds of campaigners that compose UK Divest - without your work - none of this means anything. Thank you.
Glossary of key terms
Each pension fund in the LGPS is controlled by an ‘administering authority’, on behalf of all the councils that pay into that pension fund.
Divestment is simply the opposite of investment – it means getting rid of stocks, bonds or investment funds that are unethical.
Fossil fuel companies are some of the wealthiest and most powerful companies on the planet, and they’re using their money, power and influence to block every serious attempt to stop climate change.
By convincing our institutions to divest and publicly break their ties, we can weaken the political influence of the fossil fuel industry. Every time an institution publicly breaks its ties with fossil fuel companies, we chip away at their power to carry out their immoral business plans.
In Local Government Pensions, ‘pooling’ refers to the process of individual pension funds grouping their assets (known as ‘pooling’) to be invested by a ‘Pool’ on their behalf.