Pension Funds: Financial and Ethical Investments

Patrick Grady Excerpts

Wednesday 22nd May 2019 Westminster Hall

[Patrick Grady (Glasgow North) (SNP)]

It is always a pleasure to serve under your chairmanship, Mr Howarth, and I congratulate you on managing to fit in nine Back-Bench speeches, as well as the one by the right hon. Member for Kingston and Surbiton (Sir Edward Davey) and several interventions. That demonstrates the importance of this issue to hon. Members across the House and their constituents.

I congratulate the right hon. Member for Kingston and Surbiton on securing the debate, and on framing it in such an interesting way that enabled us to consider both the ethical and the financial risks of investment in fossil fuels. As well as risks, however, there are immense investment opportunities. We have an important chance to get this right and to build a cleaner, greener and more sustainable future for us all.

The subject is of considerable concern to many of our constituents—I have certainly received emails about it, and people have come to my surgery to speak to me, which is always a demonstration of the importance that people attach to an issue. The divestment campaign has been running for a considerable time. In 2014 there was a successful campaign at the University of Glasgow in my constituency, since when the university has made a concerted effort to divest away from polluting and fossil fuel technologies.

As the extremity of climate events increases, the urgency becomes clearer and the momentum behind the campaign continues. Hon. Members have mentioned that energy companies and other such industries are willing to engage with that momentum, but they also need support and incentives. The declaration of a climate emergency is crucial because it helps to reframe that policy debate. We in Parliament have declared a climate emergency, civil society is doing so, and Glasgow University and Glasgow City Council have done so. The Scottish Government and the SNP have also made that declaration, but I think I am right in saying that the UK Government have not done so yet. They may have accepted the motion that was passed but they have not yet declared a climate emergency, and that is a missed opportunity to show leadership.

[Deidre Brock (Edinburgh North and Leith) (SNP)]

Does my hon. Friend agree that consistent, reliable policy frameworks from Governments are essential when encouraging investors to take up the ethical investment opportunities that I know they are keen to take up?

[Patrick Grady]

My hon. Friend is right, and I hope we will hear that point from the Minister.

Difficult decisions will have to be made. The Scottish Government have halted their plans to cut departure tax at airports, and the First Minister said in the Chamber that we will have to look again at our stance on the expansion of Heathrow. Those are the ways that we can begin to make that just transition, and that is the importance of the Divest Parliament pledge, which I and the vast majority of SNP Members have signed and are happy to endorse.

[David Duguid]

Will the hon. Gentleman give way?

[Patrick Grady]

I am conscious of the time, and as the Chair said, we must ensure there is time for the Minister and shadow Minister to respond.

We must lead by example, and starting with our own pension funds is one of the best ways to do that. Like the hon. Member for Bristol West (Thangam Debbonaire), and others, I hope that the trustees are listening to this debate.

It is right to place an emphasis on both the ethical and the financial risks. The ethical risks are there for us all to see. The impact of over-reliance on fossil fuels over the years most affects people in developing countries, whose consumption of fossil fuels has been the least, but who are feeling the impact of climate change first and hardest. As the hon. Member for Somerton and Frome (David Warburton) said, this is not just about financial prudence; there is also a financial logic to switching investments towards clean, green and diversified technologies. Even without a reduction in emissions for reasons of climate change, fossil fuels are a finite resource, and one day they will run out. We must make the transition.

While we still use fossil fuels, we must do so as cleanly as possible. That means investment in things like carbon capture and storage, on which the UK Government have again been woefully lacking. Governments have a responsibility to create a climate-friendly investment environment. The Scottish Government are doing their part with solid environmental and ethical considerations and procurement guidance, as well as the establishment of the Just Transition Commission, which will seize those transition opportunities while ensuring that communities are not left behind as they were during the deindustrialisation of the 1980s.

The UK Government must play their part, and we heard interesting proposals from the right hon. Member for Kingston and Surbiton about aligning decisions to the Paris agreement targets. I suggest that aligning decisions to the sustainable development goals would also make a lot of sense. In reserved areas, the Government should fully operationalise carbon capture technologies and accelerate action to decarbonise the gas grid. They should redesign vehicle and tax incentives to support industry, and commit to adhering to future EU emissions standards, irrespective of our future status within the EU. They should reduce VAT on energy efficiency and home improvements, and support the renewables industry more generally. All that would create a more incentivised investment environment for new, clean and green technologies.

We should listen to the future generations and climate change school protesters. If they wish to claim a pension in a sustainable environment in decades to come, that will require action now to tackle climate change and build a financially viable and sustainable pension fund. For them we must seize this opportunity and look not just at financial and ethical risks, but at the financial and ethical opportunities of a cleaner, greener and more just world.