Universities encouraged to Step Up for more ethical pensions
Guest blog from George Hammond of ShareAction's Step Up campaign highlighting the need for more ethical pensions in the Higher Education (HE) sector
The Universities Superannuation Scheme (USS) is a pension scheme whose members include academic and academic-related staff in many United Kingdom universities. It is the largest occupational pension fund in the UK with assets under management of over £49bn as of March 31st 2015.
The USS Top 100 Investments are published quarterly, and as at 30th September 2015 included £301.5m and £206.1m invested in Royal Dutch Shell and British American Tobacco respectively.
USS members have been campaigning for their fund to take the lead in ethical and Responsible Investment (RI) for almost twenty years. As a result of the 1997 People & Planet campaign 'Ethics for USS', a petition signed by thousands and sustained grassroots activism, the USS has established a RI policy, appointing an in-house RI advisor and entering into dialogue with members.
The USS: Step Up campaign is run by a team of academics and university staff, both current and retired, concerned about how their savings are being managed. UCU (Universities and Colleges Union) members have been particularly active. The team want to see the scheme open avenues for member engagement, and to progress in three key areas:
1. Step forward on climate change, measuring and mitigating the risks posed to pensions, engaging with companies and, where necessary, moving away from the worst offenders, and invest in and promote renewable energy.
2. Step away from controversial weapons that can maim or harm civilians, and are illegal to manufacture under UK law.
3. Step in line with the Law Commission’s recent guidance on the fiduciary duties of pension funds.
The USS: Step Up team are supported in their work by ShareAction, a registered UK charity promoting responsible investment. ShareAction supports groups of pension savers to open dialogue with their schemes and to make their voices heard in the investment system.
The Pension Regulator has been asked to review USS's portfolio with particular focus on its fossil fuel holdings, as to whether their current financial strategy is the most appropriate for the purpose of generating secure income for their members.
The landmark international deal on climate change, signed in Paris in December 2015, provides motivation for USS to be obliged to listen to their members and invest more responsibly – for the good of savers, society and the environment.
As a result of COP21 and other financial incentives, big business is already taking action. Goldman Sachs has announced plans to nearly quadruple their investments into clean energy projects over the coming decade, from $40bn to $150bn, and investors representing over $3.4tn in assets have pledged divestment from fossil fuel companies. Several Universities have committed to divest from fossil fuels in recent months, including Sheffield, Glasgow and Warwick.
Following public pressure, via a 10,000 signatory petition from 350.org, ABP, the biggest pension fund in the Netherlands will reduce CO2 emissions of businesses it invests in by 25% within the next five years whilst doubling investments in sustainable energy.
There is increasing pressure to ensure that the obligations of fiduciary investors to control systemic climate risk will be considered.
After a general survey indicated that 49% of USS members had a strong preference for ethical factors to be considered in investment decisions, USS has agreed to work with Step Up on a further survey, looking at ethical issues in more detail. The group will continue to press for member engagement with USS on ethical issues.
A climate event is planned for the 9th May where USS members will be given the opportunity to discuss USS’s responses to the risks and opportunities posed by climate change, in particular the response to the Paris objectives, and suggest changes to existing investments.
With the input of UCU members, USS is intending to run an annual ‘perceptions tracker’, the first will be conducted in September this year, which will hopefully be made available to all scheme members – current, deferred and retired. A working group of USS members and UCU representatives will offer input as the survey is developed.
For more information contact: George Hammond, ShareAction.
Further reading: Product guide to ethical pensions