Shell pension fund threatened with legal action over climate risk disclosure

Written by Natalie Tuck
08/10/18

A member of the Shell Contributory Pension Fund (SCPF) has threatened the scheme with legal action unless it can prove that it is managing climate-related risk.

Backed by ClientEath, Christoph Harwood worked for the company in the 1980s and 1990s and is eligible for a pension from the scheme.

Harwood is prepared to take the fund to The Pensions Ombudsman for maladministration, following two years of unsatisfactory answers to his requests for proof the fund is acting on the threat that climate change poses to its investments and potentially to members’ pensions.

He has exhausted the fund’s internal dispute resolution procedure, a precondition to making a complaint to The Pensions Ombudsman. He has now told the fund that he will take legal action should he fail to get a satisfactory answer to his request for documents and information on how the fund is managing climate risk.

Commenting on his complaint, Harwood said pension fund managers need to be changing their investment strategies as we move to a warmer and lower carbon world.

“Whilst the SCPF has acknowledged that climate change is one of the biggest risks it faces, it is unwilling to share with its members how it is managing this risk. All I am asking is for them to give us comfort that they are taking this seriously,” he said.

This move comes less than two months after an Australian pension fund member launched a similar action against his pension fund.

ClientEarth pensions lawyer Joanne Etherton said: “Every pension fund member has a right to know about material risks to their scheme. The documents Mr Harwood is asking for ought to show him how the fund is dealing with climate risk.”

ClientEarth highlighted that the fund is doubly exposed to climate risk, as it holds fossil fuel investments and is sponsored by an oil and gas company. Both regulators of the pensions industry, The Financial Conduct Authority, and The Pensions Regulator, have acknowledged that climate change presents material risk for investors, and the latter has issued guidance that identifies climate risk as a potentially material factor, which trustees should consider in their investment strategies.

Etherton added: “The Ombudsman is likely to take a complaint like this one seriously. So it is in the pension fund’s interests to disclose the relevant documents now and prove that it is adequately addressing climate risk.”

A determination from the Pensions Ombudsman is (subject to appeal) final and binding on the parties. It is enforceable as if it were a judgment or order of the court.

A spokesperson for Shell said: “The Shell Contributory Pension Fund (SCPF) has been responding to questions from Mr Harwood about the information we provide to our members, in line with formal procedure. Since the issues raised here are relevant to all our members, and not just one individual, we believe it is appropriate that we cover these on membership-wide basis through established channels such as our annual newsletter.”

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