A report by the Independent claims that the pension portfolio of the UK’s Environment Agency – the government body charged with protection of the environment in England – contains numerous investments in industries that the Agency regulates.
The portfolio holdings may present a conflict of interest for the Agency.
From the Independent:
The Environment Agency (EA) has been accused of having a “clear conflict of interest” after an Independent on Sunday investigation found the UK regulator’s pension fund invests millions in controversial industries which it then regulates. In the UK the EA’s pension fund – worth a huge £2.3bn – invests in companies investing in fracking, incineration and nuclear power, all of which the Agency is involved in regulating.
Globally, the fund also invests millions in chemical and mining companies, including diamond mining; tobacco and alcohol companies; arms manufacturers; a gambling company, as well as Starbucks which has been repeatedly accused of tax avoidance.
The pension details are contained in a response to a Freedom of Information request from the EA, which lists the companies it had a stake in as of March this year, its latest available audited information. And its investments are in marked contrast to the Agency’s public image of being a leading “responsible” investor that integrates “environmental, social and governance considerations into all decision-making.” The Agency champions its commitment that by 2015 “25 per cent of the fund will be invested in the sustainable and green economy”.
Despite these bold claims, the list reveals that the EA, which was heavily criticised last year for its response to flooding, holds £50m direct investments in oil and gas companies such as Shell, BP and BG Group, as well as millions more in indirect oil and gas funds.
The fund is investing in two companies financially intertwined with fracking giant Cuadrilla, the company that has been the subject of fierce protests in Lancashire and West Sussex. The first is Centrica, which is investing £60m in Cuadrilla’s Lancashire operations and the second is Riverstone Energy, which owns 44 per cent of Cuadrilla.
The Cuadrilla relationship is further complicated as Lord Browne of Madingley, who sits on Cuadrilla and Riverstone’s board, has been accused of having privileged access to Lord Chris Smith, the head of the EA. Browne, a former BP boss, met Smith on numerous occasions when Cuadrilla was trying to get a permit to frack. The minutes of one telephone meeting between Browne, Smith and other government ministers reveal that the EA offered to “shorten the consultation process prior to determining permits”, although this was rejected by Cuadrilla, which was worried about legal action.
The Agency hired consultants this year to look into the impact of divesting from fossil fuels. But the consultants advised against divesting from fossil fuel assets.
Read the entire investigation here.
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