Exclusive:Revealed: How a council pension fund has increased fossil fuels investment despite a pledge to scale back

A key pension fund has increased fossil fuel investments by millions of pounds despite a pledge from councils to shift investments away from oil and gas giants.

The Lothian Pension Fund is under fire after boosting its investment in fossil fuels despite vows from councils to divest.

New statistics show that the market value of fossil fuel investments in the pension fund has increased from £166 million in 2022 to £208m by March of this year, the last available data.

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Figures show the surge in fossil fuels investment is driven by the purchase of additional shares rather than changes in the market value of existing holdings. The move has taken place despite Edinburgh and East Lothian councils passing motions two years ago calling on the fund to divest from fossil fuels to help tackle the climate crisis.

The Lothian Pension Fund is the second biggest fossil fuel investor of all the council pension funds in Scotland. It invests in companies including TotalEnergies, Exxon Mobil, Eni, Equinor, Shell and BP.

Statistics show that in September 2022, the pension fund had total investment in fossil fuels with £166.3m, which increased to £183.6m by March 2023, reached £200.5m by September 2023 and £208.1m by March of this year.

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TotalEnergies is now the pension fund’s largest fossil fuel investment after more than 300,000 extra shares were purchased, taking the total investment in the company to £46.6m.

The fossil fuels giant is currently developing the East African Crude Oil Pipeline that will produce 379m tonnes of carbon emissions if it goes ahead.

The Lothian Pension Fund has also more than doubled its shares in oil and gas giant, Eni, with £31.5m of investment in the company.

Joan Forehand, from campaign group Divest Lothian, said: “It is appalling that the Lothian Pension Fund is choosing to invest even more of its members’ pensions in companies that, despite responsible investors’ efforts over many years to get them to change course, are doubling down on oil and gas expansion plans. 

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“The science is clear. We need to rapidly transition away from fossil fuels to avoid catastrophic climate breakdown, and the economic collapse that would bring.

“Increasing investment in the fossil fuel industry highlights the failure of the Lothian Pension Fund to adequately assess climate change risk in its financial modelling.”

Sally Clark, divestment campaigner at Friends of the Earth Scotland, said: “It’s unbelievable that despite the worsening climate crisis and clear support for ending fossil fuel investments from councillors in Edinburgh and East Lothian, Lothian Pension Fund has actually increased investments in fossil fuels. 

“These fossil fuel companies are driving climate breakdown and the pension fund's managers have a responsibility to act in the best interests of their members and future generations. 

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“The money moved away from fossil fuels could instead be invested in ways that support local communities and protect the planet for everyone, like renewable energy. As skyrocketing energy bills are plunging millions of people into fuel poverty across the UK, this transition is more important than ever.” 

David Vallery, CEO, Lothian Pension Fund said: “Lothian Pension Fund’s transition of energy sector holdings is already more advanced than in the real world, where 80 per cent of the world’s energy needs are still derived from fossil fuels.”

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