The pension fund run by Notts CC and including several other major employers in the region invests in BP. As supplies of easily obtainable oil dwindle, companies are investing in more high risk methods of getting oil. One of these is tar sands in Canada.
Notts CC pension scheme has admitted it invests in BP. John Pearson, the Investments Manager has admitted as much in an email to a member of its pension scheme. Nottinghamshire CC is part of a scheme called Nottinghamshire Pension Funds (NPF) and other contributing employers include Nottingham City Council, all the district and borough councils, the police and Nottingham Trent University.
BP is on the point of making a big decision – whether to invest in the tar sands in tar sands in the Athabasca region of Alberta in Canada. Campaigners have been mobilising to ensure they do not do this.
National Feature: Anti-Tar Sands Protests Gather Momentum
C6. Graphical Reality
Tar sands are a naturally occurring bituminous deposit where the bitumen (like the stuff roads are made of) is mixed with sand and soil. When these deposits are near the surface they can be extracted using techniques similar to open cast mining but when they are deeper under the surface they require an extraction technique involving burning gas to super heat water into steam which is then pumped deep underground to effectively liquefy the tar sands to be able to bring them to the surface. Which ever method of extraction is used, the result is more greenhouse gases being used to extract the oil from the tar sands and toxic tailings ponds polluting the groundwater and rivers of the area. Fair Pensions website provides more detailed information and links to other sites about tar sands (link below).
A motion was brought to the recent BP AGM by Fair Pensions, and supported by a number of environmental organisations, the Coop and Unison. The resolution demanded that BP commission and review a report setting out the assumptions made by the company about proceeding with the Sunrise Project in Athabasca, specifically with reference to greenhouse gas emissions and local environmental damage and to report back in a years time.
In other words: to wait and think before proceeding with this project.
As a shareholder in BP, Nottinghamshire Pension Fund is entitled to vote in the AGM. NPF is also a member of the Local Authority Pensions Fund Forum (LAPFF). They were advised by LAPFF to vote against the motion, as were all members of LAPFF. 15% of shareholders voted for the motion or abstained (LAPFF later revised their advice to abstain) so at the moment BP may have won the vote but not the argument.
However Notts CC is also a member of the UK Social Investment Forum which claims to be the world leader in "advancing sustainable development through financial investment... to align investment profitability with social and environmental responsibility". NPF in its statement of investment principles (Appendix B: Statement on Responsible Investment) says that “environmental and social governance (ESG) issues will be taken into account where these are likely to impact on returns”.
So we have a disconnect here between the understandable need of the pension fund to invest wisely on behalf of the hundreds of people (many of them low paid) who have pensions with NPF and the environmental and social governance issues related to investing in a company that is moving towards developing a process that produces up to 3 times the amount of greenhouse gases than conventional oil (and incidentally means that Canada cannot meet its Kyoto protocol targets); is extracted by a process that requires large amounts of natural gas to be burned to produce steam to extract the tar into a form that can be transported and refined; is linked to contaminated river and groundwater supplies; deforestation of arboreal forest the size of England and health impacts on the indigenous peoples.
But never mind these issues, if NPF is only interested in the financial side of things then perhaps they should listen to analysts who point towards the fiscal risks in investing in a carbon intensive activity when the rest of the world, including the tar sands biggest market, the US, are moving towards low carbon economies. Perhaps they should look at the rising labour costs of tar sands, the increased numbers of men in the remote towns where tar sands are extracted which leads to domestic violence; the rising costs of equipment and materials which have doubled the costs and delayed the start of projects and the increasing need for gas in the projects which is leading to risky developments of unconventional gas.
Whatever way you look at it, NPF’s investment in BP is not good for its pensioners and goes against its own environmental and social responsibility standards.
Perhaps its time to disinvest in BP.
Notts IMC + Biffy