Over 60 prominent civil society leaders, including MPs and pension scheme chairs, have signed an open letter criticising Pensions Minister Guy Opperman for recent anti-divestment comments.

The open letter argued that Opperman had ignored the “clear moral, scientific and financial arguments for fossil fuel divestment”, when suggesting that schemes should engage with, rather than be forced to divest, from oil and gas companies.

In a recent article by Opperman on GovUK, he argued that investors with environmental concerns should hold onto their oil and gas company stocks in order to “nudge, cajole or vote” towards lower carbon practices.

However, the signatories of the letter have argued that fossil fuel companies work against international efforts to tackle global heating and are not working towards aligning with the Paris Agreement, as Opperman suggested.

The letter highlighted that companies such as Shell and Exxon are planning to “significantly expand fossil fuel extraction by 2030”, adding that for every £1 invested by fossil fuel majors, over 95 pence ends up in further expansion of oil and gas reserves that are “incompatible” with a net-zero goal.

Furthermore, it stated that the assertion that collaboration through investor engagement can turn fossil fuel majors into low-carbon companies is “not borne out of evidence”.

The letter stated: “Investor pressure has never reshaped any company’s core business and cannot transform an entire sector of powerful multinationals.

“Governments must use their powers as policy makers to force fossil fuel companies to become Paris-compliant or wind down.”

However, in his initial article, Opperman stated that the “government believes a partnership with business” is the route to achieve the change required to reach net-zero.

He also highlighted further amendments to the Pension Scheme Bill that would see schemes required to take into account the government’s net-zero targets, as well as the Paris Agreement goals.

However, Opperman later clarified that government should not force pension schemes to align immediately to the below 2°C Paris Agreement goal, stating that forcing schemes to divest from firms working towards the Paris goal would prevent constructive engagement.

The letter argued this anti-divestment stance contradicts government guidance, as outlined in the recent Task Force on Climate-related Financial Disclosures consultation, as well as Opperman’s own previous communications, which have praised a “shift away” from fossil fuels by pension funds.

It also stated that previous government efforts to establish the Paris Climate Agreement as a central reference for pension funds were “warmly welcome”, but that these have been undermined by Opperman’s suggestion that pensions funds need not align investments with Paris at this point in time.

The Fossil Free UK campaign also stated that Opperman’s support of continued fossil fuel investment by pension funds “flies in the face” of rising consumer demand for fossil free pensions.

It highlighted that in Westminster itself, 360 serving and former cross-party MPs have backed phasing out fossil fuel investments from the Parliamentary Pension Fund, with supporters including Labour leader Sir Keir Starmer.

Signatories of the open letter include Green Party MP Caroline Lucas, former Archbishop of Canterbury Dr Rowan Williams, Greenpeace executive director John Sauven, and the chairs of three local authority pension funds, Merseyside, Islington and Lambeth.

The letter argued that divestment makes it easier for the government to “accelerate the transition away from fossil fuels” without adverse effects on the wider public’s “hard-earned pension pots”.

It concluded: “Divestment is a logical course of action for prudent trustees who wish to manage the risks and benefit from the opportunities of the transition to a greener economy. Its financial merits and strong ethical appeal have created a growing demand for fossil free pensions.

“We appeal to Mr Opperman not to discourage others from following the actions that thousands of forward-thinking institutions have already taken.”

Responding to the letter, Opperman stated: “This Conservative government is leading globally on action to tackle climate change.

"We were the first of the G7 to put commitment to net-zero emissions by 2050 into law. We cannot do this alone and expect companies and pension funds to join us in being part of the change to net zero.

‘Our 2019 changes to regulations on environmental, social and governance issues are changing the way pension funds and asset managers operate. Forcing pension schemes to divest and sell their assets to others would be self-defeating and counterproductive.’

‘Divestment should be part of a strategic approach to managing pension schemes’ exposure to risk, rather than something to be used by default.”

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