PSC calls for East Sussex pension fund divestments

Already under pressure due to its fossil fuel investments, East Sussex County Council now faces calls to divest from companies which the Palestine Solidarity Campaign says are involved in violations of Palestinian human rights. Nick Terdre reports.

Hastings & Rye Palestine Solidarity Campaign (PSC) has called on East Sussex County Council to divest pension funds from companies which it says are “complicit in Israel’s violations of international law and Palestinian human rights.”

Research by the PSC has identified 49 local government pensions funds with total investments of £3.6 billion in such companies. The East Sussex Pension Fund has £132.1 million invested in 64 companies which it says fall into this category.

In May the PSC national organisation won a Supreme Court ruling against a government ban on local pension schemes making divestment decisions contrary to UK defence and foreign policy, thus opening the way for the East Sussex Pension Fund to revise such investments.

“Israel can only maintain its grave breaches of international law and Palestinian human rights because of products, equipment and services it receives from a range of companies and financial institutions,” the PSC says.

“These companies either supply the Israeli military, provide technology and equipment for Israel’s infrastructure of illegal military occupation, or are active in illegal Israeli settlements, based on stolen Palestinian land.”

Hastings & Rye PSC has asked its supporters to raise the issue with ESCC ahead of a Full Council meeting to be held online on Tuesday 7 July. The deadline for submitting questions was Monday 29 June.

Divest East Sussex also asked its supporters to submit questions to Full Council on the pension fund’s continuing investments in fossil fuel companies. Apart from the need to protect the environment, its argument is that such investments are becoming increasingly financially risky.

“…now the pandemic appears to have brought forward the point of peak demand for fossil fuels (possibly to 2019), revealing the overcapacity and fragility of the whole fossil fuel system and creating the prospect of big losses for investors like ESCC,” it said.

“With the window of opportunity to prevent catastrophic climate change rapidly shrinking there’s never been a more important time to tell ESCC to ditch its investments in fossil fuels.”

Motion defeated

At the last meeting of the pension committee, on 22 June, Cllr David Tutt proposed a motion, seconded by Cllr Trevor Webb, to divest from fossil fuels. However it was defeated by three votes to two.

“Members of the Pension Committee have a fiduciary duty to members of the fund, and so it would be inappropriate to make such a proposal on ethical grounds, irrespective of what our own views might be,”  Cllr Tutt told HOT.

“I therefore made this proposal on financial grounds, as the recent Coronavirus pandemic demonstrated the volatility of shares in fossil fuel companies. For example, Shell lost two thirds of its value and Exxon and BP approximately a half.

“There has since been something of a revival, but it is my belief that the value of these shares has passed its peak and so I proposed that they are sold into a position of strength.”

Although returns from oil and gas companies have historically been good, the need to tackle climate change has cast a shadow over the industry’s future, and the coronavirus pandemic has further undermined its prospects by slashing demand for fuels. BP recently admitted it will probably have to leave some oil and gas assets in the ground, a risk that divestment campaigners have long flagged up for the sector.

The company, which faced a $60 billion debt mountain at the end of the first quarter, this week sold off its petrochemical arm as part of a programme of disposals. It has, for the time being, maintained its share dividend, unlike Shell which recently cut its dividend. Both companies’ dividends are important sources of cash flow for UK pensioners.

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