Pension and insurance funds should consider urgent divestment from “very risky” coal assets and then gradually retreat from oil and gas, Ed Davey, the UK energy and climate change secretary, has warned.
Throwing his weight behind the Guardian’s “Keep it in the ground” campaign, he said a recent analysis which suggested 82% of coal reserves must remain untouched if temperature increases are to be kept below 2C – the widely accepted threshold for dangerous climate change – was “realistic”.
Davey said it was not up to an energy minister to tell fund managers how to run their businesses, but added that it was vital to introduce regulatory transparency that would drive investors from fossil fuels to renewables.
His support comes amid signs that British pension funds, banks and insurance companies have not changed their behaviour since a major report warned last year they were much more financially exposed than their European counterparts to overvalued or “stranded” fossil fuels.
And it comes as members of the European parliament in Brussels plan to establish a specialist group to campaign in favour of carbon divestment and demand new carbon reporting requirements.
Davey said investors such as the Rockefeller Brothers Fund, heirs to the Standard Oil fortunes, were already showing the way by divesting from coal and highly polluting oil or tar sands.
“Government cannot instruct these trillions of pounds and dollars that are in the control of private funds to move from x to y. What we can do is to put in place an incentive structure that will encourage people to think like that.
But Canada is not Britain. We're a petro-state and this is an election year and the last thing you can expect of our opposition leaders is to stand up for what's right.