LOCAL council pension investments will now be subject to new ethical and environmental guidelines, according to a recently published government paper.

Following a consultation carried out in June of this year, last week the Department of Work and Pensions announced the results of a long-awaited consultation on telling local councils how they should invest their employee’s pension funds.

Stroud News and Journal:

Fracking was given the go-head in the UK in May in Lancashire, and is carried out across the globe.

The new guidelines come at a crucial time after news broke that our local councils across the UK were investing a whopping £9billion into fracking – the controversial process of drilling down into the earth to release the gas inside, a process which was given the go-ahead here in the UK in May.

The way in which council pensions are invested has caused issues now for some time.

In 2015, following the revelation that some councils had been investing in tobacco companies, a survey carried out by Local.Gov revealed that 67% of respondents said councils should not invest their pensions in areas that had a negative social or environmental impact.

Yet, despite that, this year our own county council was shown in a national survey to be investing a considerable some of its employees’ money in the ethically questionable practice of fracking.

In a Law Commission report on social investment by pension funds, evidence was found that pension fund trustees were wrongly thinking that ethical and social risks were irrelevant when it came to financial activities.

However, that is now set to all change.

New government guidelines published just last week now state that, when making their investment decisions, council pension funds must consider the environmental impact, and social and governance factors, including climate change, of the investment.

Stroud News and Journal:

Parliament has just changed the regulations on what council can invest pension funds into - this includes fracking

Yet, over in Gloucestershire, politicians are still at odds with the council’s responsibility with pension fund investments.

In a meeting back in December, Cllr Ray Theodolou claimed that the council pension fund does not belong to the county council and instead it is part of something called the Brunel Partnership, but some are in disagreement.

In response, local Green Party councillor, Simon Pickering, said: “One has to question whether the county councillor is out of touch with his own government policy or whether he was deliberately not providing the full picture “

“With the future impact of climate change, they need to be forward looking and ensure there is no investment in activities that will exacerbate climate change and will result in stranded assets.”

Stroud News and Journal:

Many environmental campaigners are opposed to fracking due to the damage it can do to the earth and to humans

In a statement this week, Cllr Theodolou made his thoughts on the matter clear.

He said: “Misleading local politicians try to pretend it’s the county council’s money and we can invest it however we want.”

“That’s just not true.”

“Investments are made by independent financial experts, not by amateur councillors, and that’s important because, if the pension fund falls short, taxpayers will have to pick up the bill.”

“The pension fund will of course react to any proposed legislative changes once they come into force.”

For pensions that are already invested in foreign fracking activity, it is currently uncertain as to the impact on investments of any UK fracking operations or what legal implications there will be if the councils pull out of the fracking investments on ethical and environmental grounds.