The UK’s largest pension scheme has announced it will be divesting from its tobacco, coal and weapons holdings over the next two years.
USS – the Universities Superannution Schemes – currently has £1bn invested in fossil fuels and a further £400 million invested in tobacco and £200 million in arms manufacturers.
However, it will not be divesting this full £1.6bn. It has said it will pull funds over the next two years from companies in tobacco manufacturing, thermal coal mining (specifically where this makes up more than 25 per cent of revenues), and those involved in the production of cluster munitions (a form of explosive), white phosphorus (a chemical which self-ignites on contact with air) and landmines.
This move comes after a long period of member-driven engagement, supported by ShareAction and co-ordinated through Ethics for USS, a group of USS members.
The original student-led campaign of that name in the 1990s led USS to become the first major UK pension fund to hire a responsible investment team.
Pensions have been highly contentious in the university sector over the last two years with USS at the centre of extended strike action.
The new CEO of the USS Investment company, Simon Pilcher, appears now to be open to the changes demanded by scheme members to reflect widely-held ethical preferences of people working and teaching in UK universities, and the financial impact of societal pressures to respond to the climate emergency.
Ethics for USS member Prof Paul Kinnersley says: “It is encouraging that USS has taken the decision to exclude tobacco manufacture, thermal coal, cluster bombs and white phosphorus from its investment portfolio. We believe that the overwhelming majority of USS members will support this decision as they do not want their pension contributions invested in sectors which accelerate climate change, kill people or cause harm to them. We will continue to make USS aware of members’ views on the need for further rapid divestment particularly from carbon intensive industries in response to the climate emergency so that they can have a pension scheme that invests ethically and that they can be proud of.”
ShareAction chief executive Catherine Howarth adds: “This will greatly help to restore trust in USS at a time when it is badly damaged. There is much further to go with this process, and we hope USS will look now to follow other large UK schemes in establishing a robust new approach to regularly ascertain the views of members on investments held for their benefit, building members’ preferences into the scheme’s stewardship policy as well as taking further, bold steps to halt investment in fossil fuels.”
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