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June 28, 2017

London Pension Fund Authority’s Fake Divestment

The London Pension Fund Authority’s (LPFA) “divestment” is anything but… and activists are starting to catch on.   Like so many other universities and public pensions, the LPFA decided a partial divestment was the best way to appease activists while simultaneously retaining the fossil fuel investments that are key to maximizing the fund’s returns.

As noted in a recent DeSmog UK article of all places, Divest London activists are railing against the newly announced divestment strategy because it allows the LPFA to retain the fossil fuel stocks it already owns and any passive investments that include fossil fuel stocks.  DeSmog even quotes a divest campaigner as calling the new policy “a horrendous example” that “doesn’t exclude anybody.”

While this seems to be new news to the fossil free crowd, this “divestment” strategy has been used before at by the District of Columbia Public Pension, Boston University, Univ. System of Maryland, Univ. of Oregon, and Salem State Univ., which all retained their passive investments (i.e. mutual funds) that contained fossil fuel stocks.   Strangely enough, Fossil Free and 360.org have never shied away from counting such partial divestments as “victories” and including them in their, entirely meaningless, year-end tally.

From the perspective of the fund this strategy will at least mitigate the steep costs that are associated with dumping and avoiding stocks from an entire sector and be enough of a gesture that the London Mayor can technically fulfill his campaign promise to “take all possible steps to divest the London Pension Fund Authority of its remaining investments in fossil-fuel industries.”

This divestment announcement, like all those that preceded it, is clearly more about political positioning than having any impact on climate change.