Local authority pensions have more than £1.2 billion invested in fossil fuel companies, new analysis by environmental campaigners has found.
Friends of the Earth Scotland said that many councils that have declared a climate emergency have not taken action to end their investments in coal, oil and gas firms.
It said that Strathclyde Pension Fund was the “worst offender” in Scotland with more than £508 million invested in companies such as Shell, BP and Exxon.
The fund is operated by Glasgow City Council for its own council area and on behalf of East Ayrshire, North Ayrshire, South Ayrshire, North Lanarkshire and South Lanarkshire.
With Glasgow due to host the Cop26 UN climate conference later this year environmental campaigners are calling on local authorities to divest from fossil fuels.
Ric Lander, divestment campaigner at Friends of the Earth Scotland, said: “With the world coming to Scotland this autumn to negotiate action on the climate crisis, pension funds now have a clear deadline for addressing their polluting investments.
“Local councillors have the opportunity to show leadership on climate action by telling fund managers to divest from fossil fuels.
“Many local authorities have declared a climate emergency and have plans in place to bring down emissions from transport, buildings and waste. Pension fund investments are currently working against this progress by continuing to back the ageing fossil fuel economy.
“Scottish council pensions are directly invested in the continued search for new fossil fuels through their ownership of companies like Shell and BP. This drive is undermining efforts to curb the climate emergency here in Scotland and doing untold damage to vulnerable communities around the world.
“Local authorities have the power and duty to ensure local workers have a pension for their retirement, but also a future worth retiring into. Instead of stubbornly sticking with old systems of investment that worsen climate breakdown, councils should boost investment in renewable energy and social housing.”
He urged Glasgow City Council to “challenge their own pension fund to invest for the future”.
He said: “That means councillors seizing the moment provided by the UN climate talks to demand a decisive break from dirty investments.
“Fossil fuel companies are slowing the transition to a healthy economy and driving a climate crisis that’s harming Glasgow and the world.”
The Lothian pension fund, which is operated by the City of Edinburgh Council for its own area and on behalf of East Lothian, West Lothian and Midlothian, has the second largest amount invested in fossil fuel companies, at £164,691,111.
The information came from Freedom of Information requests by Platform and Friends of the Earth.
Stephen Smellie, deputy convenor of Unison Scotland, said: “There is a moral and ethical case for divesting from polluting fossil fuels.
“But there is also a firm financial case to remove workers’ pension funds from investments that will lose value as the world moves to a low-carbon economy which is less dependent on fossil fuels.”
A Strathclyde Pension Fund spokesman said it recognises the climate emergency and risks it poses and believes the transition to a low-carbon economy is essential, including the “decarbonisation of its own investments”.
He added: “Historically, though, the fund has felt that divestment is a blunt tool in terms of securing that transition to a low carbon economy and not on its own radical enough to have a meaningful impact on the climate emergency. Instead, it has preferred to be an activist investor – pushing for improvements on everything from carbon disclosure and lowering emissions, while committing hundreds of millions of pounds into a range of renewable energy projects.”
He said the fund’s climate change strategy is being updated, including consideration of a net-zero objection, and this will also involve examining future investment strategy.
A spokesman for local authority umbrella body Cosla said: “We know that administering authorities and pension funds take their responsibilities seriously and operate within both their legal and fiduciary duties.”