GMPF under pressure to divest from fossil fuels
LGPS fund under increasing pressure to immediately shift away from fossil fuel assets.
The Greater Manchester Pension Fund (GMPF) faces pressure to divest from fossil fuels and the arms industry amid a £1.3bn allocation to the non-renewables industry.
A motion, set to be proposed at a Manchester City Council meeting on 27 November, urges the £32bn Local Government Pension Scheme (LGPS) fund to “work towards divestment” and develop a “clear” transition plan aligned with the 1.5°C goal of the Paris agreement. The motion also calls for divestment from the arms industry.
Green Party councillor Astrid Johnson, who authored the motion, told Net Zero Investor: “GMPF’s investments in fossil fuel and arms companies carry financial, ethical risks and reputational damage. These investments may conflict with personal values of Manchester’s pension holders, particularly on climate change and human rights.
“One of the fundamental things related to divestment from fossil fuels and arms is the environmental impact of the production of weapons, armed conflict itself and post-war reconstruction.”
£1.3bn invested in fossil fuels
According to the motion, GMPF holds “at least” £1.3bn of assets in the fossil fuel industry, including holdings in Shell (£425m), BP (£252m), TotalEnergies (£109.2m), and Glencore (£24.5m). Analysis by UK Divest indicates that GMPF’s fossil fuel holdings are currently held within equities, pooled investments, and bonds.
Despite GMPF’s fossil fuel allocation accounting for less than 6% of the total fund, Johnson highlighted that it is “one of the highest percentages” among LGPS funds.
GMPF is part of the Northern LGPS pooling vehicle, which collectively holds “at least” £3bn in fossil fuel investments, according to UK Divest. Net Zero Investor has sought clarification on the extent of GMPF’s holdings within pooled structures, as divesting from specific assets in pooled investments may pose challenges. This issue recently led East Sussex Pension Fund to vote against divestment from its fossil fuel holdings due to structural limitations and potential financial losses.
The motion contends that “fossil fuel investments should be considered part of the council’s ‘carbon footprint’, and divesting our pension fund is among the most impactful steps we can take to reduce our environmental impact.”
Although GMPF has set a 2050 target for achieving net zero, the motion asserts that other LGPS funds are making more substantial progress.
“We do need robust and transparent reporting on the progress plan,” Johnson explained. “We need an immediate freeze on investment that includes coal and tar sands. We also need a freeze on any new investments to completely divest from them within two years.”
“We also really need GMPF to start to model their Scope 3 emissions, alongside Scope 1 and 2,” Johnson added.
Not a ‘business as usual’ approach
In response to the motion, GMPF referenced a statement within the Greater Manchester 5-Year Environment Plan 2025-2030, emphasising that the fund operates under a “clear ethical framework” and actively engages with the “highest-emitting companies” in its portfolio.
“The fund is clear that ‘business as usual’ for fossil fuel companies is not an option, and that is why the fund believes that challenging these companies to disclose their business models, and the assumptions that underpin their investment decisions, will lead to greater capital discipline,” GMPF said in a statement.
According to GMPF, the fund’s active equity holdings were 20% less carbon intensive than the average pension fund, whilst it is the biggest LGPS investor in renewable energy and energy efficiency, with over £1bn allocated to biomass and wind farm assets.
As of March 2024, the fund’s share of climate solutions stood at $1.5bn.
“The fund will not shirk from its leadership role and disinvest allowing others who do not care about the environment to own those shares instead and fail future generations to come.
“The fund is working hard to achieve carbon neutral status as quickly as possible without jeopardising the hard-earned pensions of our workers and pensioners or increase the costs for hardworking taxpayers of Greater Manchester,” GMPF’s statement read.
East Sussex LGPS fund puts fossil fuel divestment on the agenda
