The Bureau of Investigative Journalism (TBIJ) has found that local government pension schemes across the UK, including Bedfordshire, have invested almost £3bn in funds holding assets that have been hit, stranded or put in the direct line of fire in the ongoing war.
The money has been invested via funds managed by firms like BlackRock (the asset manager run by billionaire Larry Fink), which TBIJ said earn billions of dollars in fees by investing UK savers’ money in risky assets.
Cllr David Noland, a member of North Yorkshire’s pension fund committee, says he is “exceedingly worried” to hear about these investments.
He has been pushing for the fund to sell its investments in coal, oil and gas on the grounds that they will fall in value as the world switches to renewable energy.
“I see [this war] reinforcing those arguments,” he said.
Those concerns are echoed by financial analysts. Guy Prince, head of energy supply at thinktank Carbon Tracker, says: “It raises the question about whether long-term pension savings should depend on politically unstable regions and an uncertain future energy demand.
“Fossil fuels are financially risky now, and their resilience is hugely in question. Pension funds really have to consider whether these assets remain appropriate for long-term, stable returns.”
Drone attacks
Read: Investigation finds Bedfordshire pension fund tied to major fossil fuel investments
The various deals that carry money from UK pension pots to Middle Eastern fossil fuel projects are complex and hard to trace.
Local government pension schemes invest in infrastructure funds, which offer a healthy return. These funds then seek out assets to invest in that provide long-term and supposedly stable returns.
The result is that the risk of holding these assets is often transferred from oil and gas companies to ordinary public-sector workers and retirees.
According to TBIJ, Bedfordshire Pension Fund has exposure to an investment fund that agreed to buy Castrol last year.
At 7.20am on 1 April, a warehouse for Castrol oil in Iraq was hit by a drone, causing a major fire, according to reports.
As firefighters struggled to contain the blaze, there was a second attack, followed hours later by a third. “Nothing inside the warehouse remains unburned,” said a local governor.
The most intense attacks during the Middle East war have been along the coast of the Persian Gulf.
Read: Bedford councillors back call to review pension fund investments linked to Gaza conflict
Torbjorn Soltvedt, analyst at Verisk Maplecroft, a risk consultancy, says: “These are sites that are within easy range of Iranian drones and short-range missiles.
“But also, we have some of the world’s most important energy facilities in these areas – so export terminals, ports, refineries, [Liquefied Natural Gas] LNG facilities.”
Border to Coast is an asset management company created to pool the investments of multiple Local Government Pension Scheme (LGPS) funds, including Bedfordshire Pension Fund.
TBIJ said Border to Coast had invested in the Stonepeak IV Investment Fund, which includes the Al Daayen LNG tanker and the Seapeak Bahrain LNG storage unit.
TBIJ added that these LNG tankers are effectively trapped in the Persian Gulf, behind the Strait of Hormuz.
A spokesperson for Border to Coast Pensions Partnership told TBIJ: “Our portfolios are diversified across geographies, sectors and asset types, and are managed with robust risk management frameworks in place.
“We continuously monitor geopolitical and market developments. Our approach as a responsible steward of assets is focused on managing and mitigating long-term systemic risks and supporting stable, long-term outcomes for LGPS Partner Funds.”
Bedfordshire Pension Fund is administered by Bedford Borough Council.
The Local Democracy Reporting Service (LDRS) asked the fund, via the council, how concerned pension members should be about possible losses in the fund’s assets, and whether the fund could reassure members that any impacts would be minimal.
It did not respond by the time of publication.
By John Guinn, Local Democracy Reporter
& The Bureau of Investigative Journalism
