At today’s full council meeting in Edinburgh, my colleague Chas Booth and I were all set to have an argument. We fully expected the Conservative Group to challenge our motion calling on the Council to explore the possibilities of divesting Council investments, including pensions, from fossil fuel companies. Over 6 years ago I tried this for the first time, only to be told by the then LibDem/SNP administration (and the Tories, of course), not to be so silly (despite the fact I quoted the LibDem’s own divestment policy). However, somewhat surprisingly, today the whole Chamber agreed.
I’m keen on divestment for a number of reasons. As a South African who opposed apartheid I know the impact and the value of the divestment campaign in changing the minds of the South African government about the future of apartheid.
So why Fossil Fuel divestment. Well, firstly climate change is a serious threat to our existence – it is the global emergency we face today – so we should do everything we can to stop it.
And that means that we must constrain the amount of fossil fuels we burn. Even the most conservative estimates suggest that burning 20% of the claimed reserves will push us to the limits of climate change – 80% must remain in the ground. This is something which many governments are starting to address, because of the drastic consequences for communities around the world.
The claimed reserve is essential in understanding this. A claimed reserve is a resource that a company has identified and has the rights to extract. It actually exists – it’s not about exploration rights – and the company can control it. It is in no small part on the basis of these future reserves that the value of companies is set. That means that the fossil fuel companies are already massively over-valued – they are valued on claimed reserves that we cannot afford to burn.
So we can’t even burn the fossil fuels that the companies claim on their balance sheets. But in order to keep their valuation the companies must keep finding more reserves to prove their future sustainability. That exacerbates the problem even further. More money is invested on the basis of reserves that we know cannot be used. This creates a carbon bubble – even Mark Carney agrees that this is happening now – and so we have the problem of ‘stranded assets’. Where have we heard this before?
Last night, Richard Murphy, a leading economist and accountant, speaking on the future of Scotland’s economy, said: “Fossil fuel investment is a nightmare – it is where the next economic crash is going to happen.”
I really do hope the decision in the Chamber this morning is the first step towards a fossil fuel free city – we must pay attention to our fiduciary duty and ensure we consider our pension investments with intelligence and diligence.