Agenda item

Fossil Fuel Divestment

9.1

It was moved by Councillor Robert Murphy, and seconded by Councillor Alison Teal, that this Council:-

(a)       notes reports from the International Energy Agency that at least two thirds of current fossil fuel reserves must remain unburned if warming in excess of 2 degrees is to be avoided;

(b)       further notes reports from the Carbon Tracker Initiative that investing in fossil fuel companies is an increasingly risky prospect due to the possibility of fossil fuel reserves becoming “stranded assets” when global deals to mitigate climate change, such as the Paris Climate Agreement, are implemented;

(c)        notes that once money has been divested from fossil fuels it can be reinvested in more environmentally sustainable and socially beneficial assets like renewable energy, affordable housing, and the local economy;

(d)       therefore believes that there is not only a convincing moral and environmental case for institutional investors to divest from fossil fuels, but also a compelling financial one;

(e)       welcomes the decision by Waltham Forest Borough Council’s Pension Fund Committee on 22nd September 2016 to “exclude fossil fuels from its [investment] strategy over the next five years” because “investing in companies that rely heavily on ……. fossil fuels, at a time when the environmental impact is a matter of increasing scrutiny, is seen as risky”;

(f)        notes that the Waltham Forest commitment is the first of its kind from a Local Authority Pension Fund in the UK, and welcomes the leadership that the Waltham Forest Pension Fund Committee has shown;

(g)       further welcomes the fact that some institutional investors in South Yorkshire have also shown leadership in this area, for example:-

(i)         the University of Sheffield’s commitment in November 2015 to divest its £39 million endowment fund from fossil fuels;

(ii)        Sheffield Hallam University’s statement in January 2016 that it “had not and will not invest in fossil fuels”; and

(iii)       South Yorkshire Pensions Authority’s adoption of a Climate Change Policy in March 2016 that states the Fund will “endeavour to manage a tilt within portfolios towards lower carbon assets in-line with the Paris Agreement, with a view towards progressively decreasing the Fund’s carbon exposure”;

(h)       believes that, although these are positive steps, Sheffield should set its ambitions higher with respect to fossil fuel divestment;

(i)         therefore declares its aspiration for Sheffield to become the United Kingdom’s first “fossil free city”:  the first city in the UK in which all of the major local government, higher / further education and faith institutions have committed to divesting their investments and pension funds from fossil fuels, to the extent that they hold the power locally to do so;

(j)         pledges to lead by example on fossil fuel divestment in Sheffield by committing to develop a plan to not invest in stocks, shares, or bonds issued by fossil fuel companies, and to divest itself from any such investments that are currently held over a reasonable period of time to be determined by the Cabinet Member for Finance and Resources and the Director of Finance;

(k)        calls upon the Administration to include in the Council’s Treasury Management Strategy for 2017/18 a statement on ethical and environmental investment incorporating the above commitment;

(l)         calls upon South Yorkshire Pensions Authority, subject to meeting its fiduciary duties and following consultation with members of the scheme, to immediately freeze any new investment (both direct and indirect) in fossil fuel companies, and to draw up a plan for a managed divestment from the top 200 companies with the largest known carbon reserves (oil, gas and coal) within five years; and

(m)      requests officers to use appropriate opportunities to encourage other major institutions and employers in Sheffield to join Sheffield City Council in making divestment commitments of their own.

9.2

Whereupon, it was moved by Councillor Craig Gamble Pugh, and seconded by Councillor Kieran Harpham, as an amendment, that the Motion now submitted be amended by the deletion of paragraphs (i) to (m) and the addition of new paragraphs (i) to (p) as follows:-

(i)         declares its aspiration that Sheffield should play a pioneering and leadership role in becoming fossil free as a city and recognises that, if this is to be achieved, it is important to work in partnership with stakeholders across the city to develop a collective and shared agenda that all major partners will be involved in;

(j)         believes we should look at a full range of ways in which we can reduce the city’s reliance on fossil fuels, including action on divestment and also on support for renewable energy and the green economy;

(k)        acknowledges the work of the Green Commission in the city to bring together partners to develop an ambitious and broad plan to set out how Sheffield can become more sustainable in the future and believes it is important that this is done through partnership to realise the full potential of institutions in the city who hold the power locally to make change happen;

(l)         notes that the Council’s response to the Green Commission will be submitted to the Cabinet in the coming months, and that the recommendations of the Green Commission will be used to inform Council policy development;

(m)      confirms that the Council does not and will not invest in fossil fuels, demonstrating the Council’s existing commitment to leading by example on fossil fuel divestment;

(n)       notes that the Administration will include a statement on ethical and environmental investment in the Council’s Treasury Management Strategy for 2017/18, incorporating the above commitment;

(o)       believes that, as a local authority, we have a considerable degree of power to act, but also believes we can achieve more by working with partners to influence wider adoption and this should inform the approach we take; and

(p)       condemns the Government’s approach of stating that councils will be penalised for diverging from the same environmental and social policies of central government in its procurement practices, and believes this flies in the face of localism.

9.2.1

(NOTE: With the agreement of the Council and at the request of the mover of the amendment (Councillor Craig Gamble Pugh), the amendment as circulated at the meeting was altered (by the removal of all the wording in paragraph (m) and its replacement by revised wording) in order to more accurately reflect the Council’s position in relation to fossil fuel investment.)

9.3

On being put to the vote, the altered amendment was carried.

9.3.1

(NOTE: Councillors Pauline Andrews, Jack Clarkson and John Booker voted for paragraphs (j) to (l) and (n) to (p) and against paragraphs (i) and (m) of the Amendment, and asked for this to be recorded.)

9.4

It was then moved by Councillor Andrew Sangar, and seconded by Councillor Ian Auckland, as an amendment, that the Motion now submitted be amended by:-

1.         the deletion, in paragraph (h), of all the words after the words “positive steps”, and the addition of the following words “Local Government Cabinet Office procurement policy note of 17 February 2016, entitled ‘Putting a stop to public procurement boycotts’, limits the extent to which local authorities in England and Wales can use boycotts in their procurement and pensions investment policies”; and

2.         the deletion of paragraphs (i) to (m) and the addition of new paragraphs (i) to (k) as follows:-

(i)         believes that this new guidance is an attack on local democracy and is another example of the Government centralising powers and dictating policy to local authorities, moving away from the localism agenda that the Liberal Democrats implemented whilst in the Coalition Government;

(j)         believes that it should be up to individual communities to decide which companies they wish to do business with in a fair and transparent process and, whilst we think it is right that public sector procurers are required to seek the best value for money for the taxpayer, local councils should have regard for the wider interests of their local populations, which they have been elected to represent; and

(k)        directs that a copy of this motion be sent to the Department for Communities and Local Government and the Department for Business, Energy and Industrial Strategy.

9.5

Following a right of reply from Councillor Robert Murphy, the amendment was put to the vote and negatived.

9.6

The original Motion, as amended, was then put as a Substantive Motion in the following form and carried:-

RESOLVED: That this Council:-

(a)       notes reports from the International Energy Agency that at least two thirds of current fossil fuel reserves must remain unburned if warming in excess of 2 degrees is to be avoided;

(b)       further notes reports from the Carbon Tracker Initiative that investing in fossil fuel companies is an increasingly risky prospect due to the possibility of fossil fuel reserves becoming “stranded assets” when global deals to mitigate climate change, such as the Paris Climate Agreement, are implemented;

(c)        notes that once money has been divested from fossil fuels it can be reinvested in more environmentally sustainable and socially beneficial assets like renewable energy, affordable housing, and the local economy;

(d)       therefore believes that there is not only a convincing moral and environmental case for institutional investors to divest from fossil fuels, but also a compelling financial one;

(e)       welcomes the decision by Waltham Forest Borough Council’s Pension Fund Committee on 22nd September 2016 to “exclude fossil fuels from its [investment] strategy over the next five years” because “investing in companies that rely heavily on fossil fuels, at a time when the environmental impact is a matter of increasing scrutiny, is seen as risky”;

(f)        notes that the Waltham Forest commitment is the first of its kind from a Local Authority Pension Fund in the UK, and welcomes the leadership that the Waltham Forest Pension Fund Committee has shown;

(g)       further welcomes the fact that some institutional investors in South Yorkshire have also shown leadership in this area, for example:-

(i)         the University of Sheffield’s commitment in November 2015 to divest its £39 million endowment fund from fossil fuels;

(ii)        Sheffield Hallam University’s statement in January 2016 that it “had not and will not invest in fossil fuels”; and

(iii)       South Yorkshire Pensions Authority’s adoption of a Climate Change Policy in March 2016 that states the Fund will “endeavour to manage a tilt within portfolios towards lower carbon assets in-line with the Paris Agreement, with a view towards progressively decreasing the Fund’s carbon exposure”;

(h)       believes that, although these are positive steps, Sheffield should set its ambitions higher with respect to fossil fuel divestment;

(i)         declares its aspiration that Sheffield should play a pioneering and leadership role in becoming fossil free as a city and recognises that, if this is to be achieved, it is important to work in partnership with stakeholders across the city to develop a collective and shared agenda that all major partners will be involved in;

(j)         believes we should look at a full range of ways in which we can reduce the city’s reliance on fossil fuels, including action on divestment and also on support for renewable energy and the green economy;

(k)        acknowledges the work of the Green Commission in the city to bring together partners to develop an ambitious and broad plan to set out how Sheffield can become more sustainable in the future and believes it is important that this is done through partnership to realise the full potential of institutions in the city who hold the power locally to make change happen;

(l)         notes that the Council’s response to the Green Commission will be submitted to the Cabinet in the coming months, and that the recommendations of the Green Commission will be used to inform Council policy development;

(m)      confirms that the Council does not and will not invest in fossil fuels, demonstrating the Council’s existing commitment to leading by example on fossil fuel divestment;

(n)       notes that the Administration will include a statement on ethical and environmental investment in the Council’s Treasury Management Strategy for 2017/18, incorporating the above commitment;

(o)       believes that, as a local authority, we have a considerable degree of power to act, but also believes we can achieve more by working with partners to influence wider adoption and this should inform the approach we take; and

(p)       condemns the Government’s approach of stating that councils will be penalised for diverging from the same environmental and social policies of central government in its procurement practices, and believes this flies in the face of localism.