The Scottish Parliamentary Pension Scheme manages the pension contributions of Members of the Scottish Parliament. The scheme is overseen by a board of trustees, most of whom are MSPs. Its investments are currently held in two pooled funds managed by private investment firm, Baillie Gifford.
The scheme does not have a policy that prohibits investment in nuclear weapons producers or other harmful industries. In 2014, a response to a question to the Scottish Parliamentary Corporate Body by Scottish Greens MSP, John Finnie, revealed that nearly a tenth of the scheme was invested in fossil fuel, tobacco and arms companies, including Rolls Royce.[1] Rolls Royce is one of the world’s largest defence contractors and one of four key contractors involved in Britain’s Trident nuclear weapons programme (see section 2).
The fund continues to hold shares in tobacco and fossil fuel companies, however, Baillie Gifford sold the Rolls Royce holding in the third quarter of 2020.[2] This decision was not taken for ethical reasons but because fund managers decided that the company – which gets a significant proportion of its revenue from the civil aviation sector – was no longer a profitable investment. The Baillie Gifford quarterly report for the relevant period notes that the company was already struggling to “deliver operating margins necessary to make [it] an attractive investment” and states that “any hopes of recovery have been dashed by the dramatic decline in demand for flying by the Covid-19 pandemic”.
We welcome the news that the Scottish Parliamentary Pension Scheme no longer invests in Rolls Royce. However, without an ethical investment policy there is nothing to prevent the scheme being reinvested in Rolls Royce or any another nuclear weapons contractor in future.
Moving in a more ethical direction?
The scheme’s trustees have come under pressure to adopt a more ethical position from organisations such as Don’t Bank on the Bomb Scotland and Friends of the Earth Scotland. In late 2019 it was revealed that the trustees were considering transferring some of the scheme’s assets into a third fund “with the aim of incorporating a higher ethical, environmental, social or governance approach into the investment strategy”.[3]
This is a positive sign that the scheme’s trustees are taking ethical concerns seriously, however, if implemented, the proposal would still allow the scheme to be invested in harmful industries through the other two funds. The whole scheme should be invested in a fund or funds that comprehensively exclude nuclear weapons and other harmful industries from investment.
This would likely be a popular move. A March 2018 Survation poll found that nearly three quarters of Scots believe that the Scottish Parliamentary Pension Scheme should divest from arms, tobacco and fossil fuels.[4]
ACTION: What you can do
Please write to your MSPs to explain why the Scottish Parliamentary Pension Scheme should adopt an ethical investment policy. Request that that they pass on your concerns to the chair of the scheme’s trustees.
You can find out who your MSPs are at www.writetothem.com. This site also allows you to email your MSPs using an online form. You can use our template letter or compose your own.
If you do not get a satisfactory response, you can seek a meeting with your MSPs at their local surgery.
You can also email your MSPs directly about the scheme’s fossil fuel investments at https://act.foe.scot/msp-divest-scotland.
NOTES
[1] Meeting of the Scottish Parliament 13 November 2014 – Official Report: http://www.parliament.scot/parliamentarybusiness/report.aspx?r=9622&i=87435#ScotParlOR.
[2] Baillie Gifford, Scottish Parliamentary Contributory Pension Fund: Report for the quarter ended 30 September 2020.
[3] See minutes of the June 2019 trustees’ meeting: https://www.parliament.scot/StaffAndManagementResources/2019_09_17_Minutes_final.pdf and reporting by The Ferret: https://theferret.scot/pension-fund-ethical-review-shell/. A subsequent meeting of the trustees took place on 22 January 2020, however, the Scottish Parliament declined to provide us with a copy of the minutes as requested under freedom of information in November 2020, as the minutes had not yet been approved by a subsequent meeting. When approved, the minutes will be available here: https://external.parliament.scot/msps/25847.aspx.
[4] http://www.heraldscotland.com/news/16063941.Call_to_stop___3m_MSP_pension_fund_investments_in_weapons__tobacco_and_dirty_fuel_after_poll/?ref=twtrec.
Don't Bank on the Bomb Scotland 