Some £16 billion of the Local Government Pension Scheme (LGPS) is investing in the fossil fuel industry.
New research from Friends of the Earth also found that local councils are using £8 billion of pensions to invest in companies developing new oil and gas projects.
Environmental campaigners say the investments are turning “public savings into fossil fuel playthings.”
The research highlighted a variance in approach to 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.
Additionally, just 10% of funds hold over 50% of LGPS oil and gas investments – with Greater Manchester Pension Fund and West Yorkshire Pension Fund each investing over £1 billion into fossil fuels.
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By contrast over 20% of local councils now invest less than 1% – 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. Friends of the Earth noted that this should be caveated by the fact that pensions in Wales provided less data than other funds.
Two funds with the lowest proportion of their investments in fossil fuels also came from Wales – reflecting the Welsh Government’s support for divestment in 2022.
Friends of the Earth climate coordinator Jamie Peters commented: “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.
“It’s time to ditch financially risky holdings in gas, coal and oil, and invest in accelerating the transformation to a carbon-free future.”
