The Oxfordshire Pension Fund with £3.6bn (€4.3bn) in total assets has excluded investment into companies that derive significant revenues from thermal coal, tar sands and tobacco production.
With the adoption of a new responsible investment policy at its September meeting, the pension fund committee decided to exclude investments in thermal coal, quoting it as “the highest carbon-emitting source of energy”; tar sands, as it is among the “most carbon-intensive means of crude oil production”; and tobacco, as its products are “responsible for killing up to eight million people a year”.
The policy also excludes companies producing controversial weapons where their use is complicit in breaches of the United Nations’ human rights standards.
The Oxfordshire Pension Fund said it is committed to actively engaging with the companies it invests in, as this approach is in the long-term interest of the company, investors, and broader society.
However, it acknowledged it is unlikely that engagement with the companies that have significant activities in these areas will lead to meaningful change in their behaviour.
As a result, the fund and its investment pool manager Brunel Pension Partnership will concentrate engagement efforts on sectors and companies where engagement will be more effective.
Donna Ford, chair of the pension fund committee, said the scheme is committed to considering ESG factors in investment decisions to ensure the long-term interests of the fund are protected.
“The fund’s investment view is that tobacco companies represent a financial risk to the fund as they face intense pressure from investors, regulators and consumers, and therefore the decision to divest from tobacco is the right one,” she added.
“As a fund, we also have a commitment to be net zero by 2050. Thermal coal and tar sands are some of the most intense emitters of greenhouse gases, as such they are not compatible with our net zero target, so we will be divesting from these highly polluting sectors and reallocating money to more sustainable investments,” she disclosed.
Brunel exclusion
Back in March, Brunel proposed a number of exclusions in companies that have:
- thermal coal extraction revenues equal or greater than 50%;
- oil sands extraction revenues equal or greater than 25%;
- controversial weapons and non-compliance with principle two of the UN Global Compact on Human Rights;
- tobacco production revenues equal or greater than 25%.
Meeting minutes for a Dorset Pension Fund meeting held on 5 March showed that the pension fund supported the proposal from the beginning, while Oxfordshire Pension Fund minutes from a 1 March meeting showed the fund saw it as a “key discussion”.
The Wiltshire Pension Fund, in a meeting on 29 February, noted that Brunel’s proposal should be supported via the scheme adopting it as its exclusion policy.
The Gloucestershire Pension Fund’s responsible investment policy dated June 2024 shows the fund plans to adopt Brunel’s exclusions proposal once formally adopted by the pool.
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