SOCIALLY RESPONSIBLE INVESTMENT OF RCT PENSION FUND

By Terry Evans

The Annual Report for RCT's Pension Fund states "The Investment Advisory Panel has discussed Socially Responsible Investment in the context of the investment strategy. It has been decided that the overriding principle of the Fund's investment policy is to obtain the best possible return using the full range of investments authorised under the Local Government Pension Scheme regulations."

The report also lists some of the companies that the Fund has invested in. A number of them have a history of questionable ethical practices, such as GlaxoSmithkline,Shell and BP.

The RCT pension Fund Report states that the fund, as of 31st March 2002, had £6,225,886 invested in 'Aerospace and Defence'. An article that appeared in the 'Wales on Sunday' on 20th April 2003 highlighted the significance of this investment. It is ironic that a Local Authority, which is supposed to tackle social issues at home, has significant share holdings in BAE Systems, Smiths Group and GKN, companies that build weapons that will be used for oppressing and killing people throughout the world.

It is only right that the trustees want to maximise the returns on it's investment portfolio, but this need not rule out taking a Socially Responsible attitude towards investment. Indeed in a recent survey carried out by the Ethical Investment Research Service, ethical funds proved to have a lower Annualised Volatility, which means ethical funds are less risky than ordinary funds. A study by the Swiss bank Sarasin has found that returns from ethical funds were "At least comparable with those for more traditional equity investments."

Pension funds in the UK are worth over £800 billion and hold one third of all share holdings on the stock exchange. Local Authority pension funds alone are worth £90 billion, 3% of the UK stock market. RCT's Pension Fund is worth £871 million. Therefore how RCT pension fund is invested could have a major impact on how a company operates.

It would be nothing new for Local Authority Pension Funds to have an ethical attitude towards its investment portfolio. Islington, Camden, Nottinghamshire County, and Lancashire County councils have all started to look at more socially responsible investments and have invested part of their funds in ethical shares.

At this branch's 2002 annual general meeting it was agreed that the branch should urge the pension fund trustees to reconsider its decision to not take social responsibility into account when investing funds from our members pensions and to look to review the pension fund's investment portfolio with this in mind. This is in line with UNISON's national aims and values, as set out in "Free for All", its report on Ethical Investment and International Trade. Areas of concern we feel should be considered include Human Rights, Employee's Conditions, Animal Welfare, and Environmental Impact.

We have written to the Pension Fund trustees, but have yet to recieve a reply. Watch this space.

You may be interested to know that the UNISON staff pension has recently committed £100m to Socially Responsible Investment. To find out more, click here

For more information on the socially responsible investment of pension funds there are loads of sites you can check out, but you will not go far wrong if you start with:

GlaxoSmithkline is the world's largest pharmaceutical company. It had fourteen subsidiaries in South Africa during the apartheid years, and has operations in Brazil, China, Colombia, El Salvador, Guatemala, Honduras, India, Indonesia, Mexico, and the Philippines.

At present, private pharmaceutical companies control the development of new medicines. Profit margins, not global health needs, are what determine the next new drug. GlaxoSmithKline's corporate motto is 'committed to improving the quality of human life'. GlaxoSmithKline has shown it's commitment by suing the South African Government for trying to supply AIDS victims with medicine they can afford; knowingly producing toxic drugs; and by emitting more carcinogens than almost any other chemical producer in the UK.

GlaxoSmithKline features on Greenpeace's 'Filthy 50' list of plants licensed by the National Rivers Authority to discharge toxic waste into the rivers and sea. In the year to March 1991, SmithKline Beecham (Which merged with Glaxo Welcome in 2001 to form GlaxoSmithKline) exceeded its discharge consent more than thirty times according to the NRA. It was found to have breached its consent 19 times since the beginning of 1991. It was also found to have discharged cadmium, nickel and lead for which the company had no consent.

The company has its own animal testing facilities and it has been accused of unnecessary cruelty in housing its animals. In 1990, an undercover National Anti-Vivisection Society worker reported baby mice having their toes removed, beagles kept in metal pens with concrete floors and no bedding, and dogs being transported packed two in a crate.

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Shell received worldwide attention for their involvement in the unfair trial and execution of the writer Ken Saro Wiwa and eight other Ogoni tribesmen who were hanged, by the Nigerian authorities "for speaking out against the environmental damage to the Niger Delta caused by Shell Oil". The damage they have done to the land they evicted the Ogoni people from to drill for oil is nothing short of evil. Currently shell has been forced to withdraw from Ogoniland but its ongoing exploration and production activities in other parts of the Niger Delta continue to generate controversy. Many of the Delta's wetlands and rivers have been poisoned, destroying the fishing industry, which has traditionally supported people of the region. Those living in communities in Nigeria and elsewhere will doubtless be reassured that "If armed security has to be used it shall comply with the Group's guidelines on the use of force".

In August 1989 when 150 tons of thick Venezuelan crude leaked from a Shell pipeline, into the River Mersey. The spill caused a 20-mile slick and killed at least 300 sea birds, putting another 2000 at risk due to oil ingestion. The nearby New Brighton mussel beds were also contaminated. The incident was made worse because Shell, against the warnings of local police and councillors, flushed the pipeline with lighter crude and water, in order to stop oil from solidifying and blocking the pipe. The National Rivers Authority was not informed of the spill by Shell but by the local fire Brigade, two and a half hours after the event.

Shell was also the subject of a successful Greenpeace campaign to stop them dumping a decommissioned oil storage platform in the North Sea. Shell has now asked Greenpeace to assist them in drawing up an environmental assessment. Although any company has to be commended for taking their environmental impact seriously, even the least cynical must surely see this as a 'greenwash' public relations exercise.

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BP have recently begun to receive criticism for many of their activities, the most recent for their exploration in the Arctic. Greenpeace have heavily opposed this and were nearly forced into bankruptcy through an injunction served on them by BP.

BP, like Shell, pay the military of another country to protect their interests which results in the interests of the local people and environment being trodden on, and often in the deaths of those who dare to protest. A leaked Colombian Human Right report shows BP paying the military and supplying them with details of peasant, trade union and environmental activists. The report, completed in July 1995 made specific allegations that BP passed photographs and videos of local protesters to the army, which human rights groups say led to killings, disappearances, torture and beatings. The same government report accused BP of causing serious damage to a protected forest, polluting a river, and damaging bridges as well as the only road available for locals to take their products to market.

BP has caused large-scale environmental destruction in Alaska, and is now leading the development of the Atlantic Frontier (a highly sensitive ecosystem and important expansion area for the oil industry). They are also involved in questionable developments in Peru and Angola.

BP has invested $580 million in Petrochina, China's largest oil company. No need to tell you about that country's human rights record! Through Petrochina, BP are now helping China to rape Tibet of its natural resources. Since 1998 China has been the largest supplier of weapons to the Sudanese Regime in Khartoum. In August 1999, a pipeline was put into service that runs from the oil fields around Bentiu and Heglig to Port Sudan. The war against the local populations of Southern Sudan has been fought with the goal of depopulating the oil regions. Innumerable people have already been killed and tens of thousands have fled or are fleeing because of the 'burnt-earth politics' practiced by the government

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With 76% of its sales (worth £9,230 million) being military based, BAE is the largest arms producer in Europe and third largest in the world. It has a long, shameful record of indiscriminate weapon sales to repressive regimes and regions of conflict around the world, with less than 20% of it's 'product' being sold in the UK.

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Smiths' military sales are lower at 29% (worth £878 million) of total sales, but Smiths' 2002 Annual Review states that the reduction in civil aircraft production 'was counterbalanced by rising requirements for our military aerospace and detection products. We have established strong market positions in both military and detection and expect sales to grow strongly over the next few years.'

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GKN's military sales as a percentage of overall sales is slightly lower again at 28% (worth £1,247 million) but it is still one of the largest manufacturers of Military Helicopters in the world.