The Cambridgeshire Pension Fund is in discussions about its strategy after it emerged it has invested in a United Arab Emirates (UAE) oil terminal that was struck by Iranian missiles.Local government pension schemes across the UK, including Cambridgeshire, have invested almost £3bn in funds holding assets hit, stranded or put in the direct line of fire in the ongoing war in the Middle East, according to research by the Bureau of Investigative Journalism.New Shire Hall, home of the county councilSchemes put money into infrastructure funds that seek out assets to invest in that provide long-term and supposedly stable returns – but the risk of holding these assets is often transferred from oil and gas companies to public sector workers and retirees.Through the IFM Global Infrastructure Fund, the Cambridgeshire Pension Fund invested in the VTTI Fujairah oil terminal. It was stuck by a barrage of Iranian missiles in May which caused a huge fire. As the UAE’s key oil export route bypassing the Strait of Hormuz, Fujairah has come under repeated attacks since the start of the war.A fund spokesperson said: “The Cambridgeshire Pension Fund recognises that climate risk, including the risk associated with stranded assets, has the potential to temporarily alter the value of the fund. Fossil fuel exposures are managed with a climate risk management lens.“The fund does not have a divestment policy for any sector or region, aligned with government’s latest investment strategy guidance for the local government pensions sector. Nonetheless, the fund may invest through managers that have limited or nil fossil fuel exposures. This approach has led to the fund reducing its carbon footprint by circa 35.8 per cent over the period June 2021 to June 2024, effectively managing climate risk and leading to the fund being on track to achieve net zero by 2050 or earlier. “The fund does invest through the IFM Global Infrastructure Fund. Like all managers, IFM are aware of the fund’s risk management approach and have discretion to manage their portfolio within a broad set of constraints.“The Cambridgeshire Fund is in discussion with IFM regarding its holdings in VTTI Fujairah, but these are not material, representing circa 0.01 per cent of Cambridgeshire Fund assets.” Financial analyst Guy Prince, head of energy supply at thinktank Carbon Tracker, said: “It raises the question about whether long-term pension savings should depend on politically unstable regions and an uncertain future energy demand.“Fossil fuels are financially risky now and their resilience is hugely in question. Pension funds really have to consider whether these assets remain appropriate for long-term, stable returns.”
Cambridgeshire pension fund has investments in bombed Middle East oil terminal
