UK pension fund USS wins appeal over fossil fuel investments

BRITAIN’S biggest private pension scheme on Friday (Jul 21) fought off a landmark lawsuit in a London court over its alleged failure to devise a credible plan to divest from fossil fuels.

The £82 billion (S$140.2 billion) Universities Superannuation Scheme (USS) faced legal action from two of its members over its continuing investments in coal, natural gas and petroleum.

The lawsuit was blocked last year by London’s High Court and the two academics behind the claim tried to revive the case at the Court of Appeal, which dismissed their appeal on Friday.

Judge Sarah Asplin said in a written ruling that the parts of the lawsuit relating to USS investments in fossil fuels were an attempt to challenge the scheme’s management and investment decisions which was “bound to fail”.

The attempt to bring the case on behalf of USS against its directors, which has also been attempted by environmental law charity ClientEarth against Shell, will be keenly watched by other pension funds and environmental groups.

The two academics bringing the case, Ewan McGaughey and Neil Davies, argued that fossil fuel investments pose a “significant and increasing” financial risk to USS that its directors were not addressing.

BT in your inbox

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign Up

Sign Up

“By a combination of international law, political pressure and market forces, the fossil fuel investment market will decrease with time,” their lawyer David Grant said in court filings last month.

However, lawyers representing USS argued the case should be dismissed as the scheme’s investments in fossil fuels have not caused any loss to USS or the two academics, which is necessary for a derivative lawsuit to proceed.

A spokesperson for USS welcomed the judgment, rejecting what they described as “meritless claims”.

“It is of deep regret that scheme funds – money intended to pay members’ pensions – have had to be spent defending this action,” they added in a statement.

Lawyers representing McGaughey and Davies did not immediately respond to a request for comment. REUTERS