To East Riding of Yorkshire County Council and East Riding of Yorkshire County Council Pension Fund Committee
We the undersigned write to you as doctors, nurses and other members of the healthcare community in East Yorkshire. It is with grave concern that we note that East Riding of Yorkshire County Council, as the Administering Authority for the East Riding of Yorkshire Pension Fund, is investing over £318 million in the fossil fuel industry.
The fossil fuel industry poses a serious threat to human health. Fossil fuel driven climate change is already impacting the health of millions1 and threatens to reverse the last half2 century of gains3 in global health. Expert analysis, published in the 2018 report of the Lancet Countdown on health and climate change, warned that “a lack of progress in reducing emissions and building adaptive capacity threatens both human lives and the viability of the national health systems they depend on, with the potential to disrupt core public health infrastructure and overwhelm health services”4.
The fossil fuel industry has undermined climate science for many years and fossil fuel companies are now facing litigation for their contribution to climate change5 and for other offences such as misleading shareholders6 on the business risk of climate regulations. Just 100 fossil fuel companies7 have been responsible for more than 70% of the world’s greenhouse gas emissions since 1988.
The fossil fuel industry has approximately 5 times more8 carbon in proven fossil fuel reserves than be used if global warming is to be limited to 2⁰C. Warming beyond this limit, indeed warming beyond 1.5 ⁰C, would have devastating impacts9 on human health and human civilization. Despite this, the fossil fuel industry continues to explore for even more fossil fuels. Its business models are incompatible with maintaining a planet that can support healthy, safe and stable human societies.
Fossil fuels are also a major contributor to air pollution, which kills 7 million people every year according to the World Health Organisation10. This is similar to the number of deaths caused by tobacco each year.
As clinicians we have a duty of care to current and future generations to limit these dangers and for that reason we are writing to you to ask you divest from fossil fuel companies. There are immediate benefits to health from moving to a low carbon economy; a renewable powered world will not only combat climate change but will also improve the air that our communities breathe.
Motivated by these concerns, healthcare organisations are ending their investments in fossil fuels. In the UK, recent fossil fuel divestment announcements have been made by the Royal College of GPs, the Faculty of Public Health and the British Psychological Society.
Beyond the health sphere, investors and pension funds from all sectors of society are dropping their investments in fossil fuels. In the UK fossil fuel divestment commitments include those made by several UK local government pension funds, UK faith organisations, trusts, charities and at least 69 UK universities11. Outside of the UK notable divestment commitments have been made by New York City’s $189bn pension funds, the Irish Strategic Investment Fund, the World Council of Churches and the Rockefeller Brothers Fund.
East Riding of Yorkshire County Council Pension Fund’s fossil fuel investments are also becoming increasingly risky from an investment point of view; fossil fuel divestment not only makes moral sense but is also financially prudent to protect pension fund members’ pensions from the financial risk posed by fossil fuel investments. Fossil fuel assets are now believed to be overvalued; creating a dangerous “carbon bubble”. Mark Carney, Governor of the Bank of England, has warned that unsavvy investors could face “potentially huge” losses because a carbon budget consistent with a 2°C target would render the vast majority of reserves ‘stranded’ — oil, gas and coal that will be “literally unburnable”12.
Even if new climate policies are not introduced, modelling has shown that some fossil fuel asset stranding will nevertheless occur due to the already ongoing low carbon technological trajectory13.
Fossil Free indices are already outperforming their parent indices – for example, the MSCI ACWI ex fossil fuel index has outperformed14 its parent MSCI ACWI index from November 2010 to November 2018. Modelling studies by Grantham et al15 and Trinks et al16 have also found that fossil fuel divestment in the past would not have impaired portfolio performance over much longer time periods.
Thus, the evidence shows that fossil fuel divestment will not hurt portfolio performance but that it will conversely protect portfolio performance from future losses.
These strong financial arguments for fossil fuel divestment, combined with the urgent ethical need for same, have resulted in funds worth almost $8 trillion committing to end all investment in fossil fuels17.
We therefore ask East Riding of Yorkshire County Council and the East Riding of Yorkshire County Council Pension Fund Committee to:
- Immediately freeze any new investment in fossil fuel companies, including those made by externally managed and pooled funds;
- Offer a fossil free pension option to employees;
- Divest from the top 200 companies with the largest known carbon reserves (oil, gas and coal) as soon as possible and by 2021 at the very latest.