Summary of Meeting with USS May 27th



Daniel Summerfield – Head, Corporate Affairs (Chair)

Simon Pilcher, Chief Executive of Investment Management

Naomi Clark, Head Investment Product management

David Russell, Head Responsible Investment

Joel Sawyer, Corporate Communications Manager

Ethics for USS

Paul Kinnersley, retired member from Cardiff University, co-ordinator for Ethics for USS

Sue Blackwell, ex of Birmingham University and deferred member

Andrew Jarvis, Lancaster University – has ESRC project on stranded assets

Martin Seigert, Co-Director Grantham Institute, Imperial – Climate Scientist

Brian Hoskins, Co-Director Grantham Institute, Imperial – retired member and Climate Scientist

Introductions and purpose of meeting and confidentiality

Everyone on the call introduced themselves and Paul thanked USS for the meeting.

Paul went on to recognise that the economic crash related to the COVID pandemic was likely to be presenting many challenges to USS and set out that the main purpose of the meeting was for Ethics for USS to hear more about the new approach to investment made as a consequence of the review of investment strategy conducted by Simon and that had been discussed briefly in the January meeting.  Paul said that Ethics for USS were also keen to hear how USS intends to rebuild from the current financial crisis in way that promotes sustainable investment.

It was agreed that the content of the meeting would be confidential and that Ethics for USS would produce a summary to be agreed by USS.

USS’s response to Open letter from Ethics for USS regarding Shareholder Resolution 21 at Shell AGM

David stated that it was USS’s view that it was preferable and likely to be more productive to not support this resolution and continue their policy of engagement with Shell as they thought it was producing helpful change.  David reported that USS had been a founder member of the UN-backed Principles for Responsible Investment and an active participant in the Climate Action 100+ group.  David argued that there was still a considerable market for fossil fuels and that Shell was performing better with regard to climate change than any of the other oil majors although it was not yet on track to meet the Paris Accord.  He also commented that if Shell were to move away from oil and gas production, the drop in production would only be taken up by other oil companies – such as Saudi Aramco.

Andrew put to David his own suggestion from the January meeting that the most pressing issue was not the holding of Shell and other fossil fuel investments per se but the funding of further exploration of fossil fuels reserves by Shell and other companies. He recalled David’s point that withdrawing from this specific form of investment would lead to the fossil fuel reserves becoming exhausted within a decade, which would align with the Paris roadmap. David indicated that he had read the Ethics for USS blog on this specific issue and that he agreed that a ‘transition not a cliff edge’ narrative was needed but did not comment on whether USS was funding further oil and gas exploration by Shell. He added that USS recognized the need to reduce CO2 emissions now and in the future and that Shell and other companies were investing in some trial Carbon Capture schemes in Norway (

 Martin commented that Shell were not moving fast enough given our knowledge of climate change and that many were now suggesting that oil companies be ‘broken up’ for example into Shell Oil Exploration, Shell Renewables and then investors could invest more specifically into certain activities.  David commented that Shell’s renewable business was now ‘percentage’ points rather than fractions of percentages as in the past and that he would reflect on the idea of Shell being broken up.

Brian commented that he had been at meetings on climate change with Shell for very many years and was aware that they were slowly shifting their position, but he felt that they were clearly doing insufficient to meet the requirements of the Paris Climate Accord and he felt that the policy of engagement was not working. He restated that we were very clearly ‘up against the clock’ regarding climate change and that there was no time for engagement without clear actions. Brian added that Shell should see itself and be seen as an ‘energy’ company rather than an oil and gas company if it was to have a long-term future.

Announcement of Exclusion categories for USS investment strategy

Simon announced that – with a two year transition period to divest from legacy investments – USS would exclude certain categories of investment that analysis showed were financially unsuitable due to political, societal and regulatory changes.  The excluded categories are:

Tobacco Manufacture

Manufacture of certain weapons – land mines, white phosphorus and cluster bombs

Thermal coal production – where coal represented >25% of the company’s revenue 

Simon stressed that USS needed to take a very long-term view and this was an attempt to position the scheme on a strategy for the very long term and to anticipate changes that may occur in the future. Simon felt that ESG regulations would impact on investment performance with even greater certainty as time goes by and also with ever greater certainty the longer the view you take.  He wanted to anticipate the impact of this and be more vocal about what USS was doing and prepared to do.  He said he felt that industries that ‘dumped’– poisonous chemicals into ground water, CO2 into the atmosphere, harsh conditions onto their workers – could get away with this in the short term but not on a long term basis (> 5 years) and again he wanted to protect the scheme from investing in such companies.  

Simon stated it was clearly in the interests of USS and the scheme that the requirements of the Paris Climate Accord were met and added that he was aware of the risks of USS holding ‘stranded assets’ and wanted to protect the scheme against this.

Martin asked if USS were also considering divestment from companies extracting tar sands since this was a very harmful way of extracting fossil fuels.  Simon replied that they were not currently planning to divest from tar sands but that he would review this category of investment.

Brian commented that USS should be anticipating societal changes rather than waiting for them to happen and reacting, as by then the investments would have lost value.

Andrew asked that, if USS was taking a ‘very long term view’ they should be able to articulate what they anticipated the portfolio would look like in 10 and 20 years time particularly with respect to its carbon intensive investments.

Simon responded that he was keen to position the investment portfolios in a way that anticipated lower levels of carbon intensity industry in the future. David added that USS doesn’t currently actively hold Total or BP shares in its DB fund, and that ESG issues will be built into how USS selects stocks in future.

Andrew made the point that emissions will always outgrow intensity and that the Paris road map has to get us to net zero by 2050 at the latest.

Simon recognised that there were profound negative implications for investments if there was significant climate change and that it was the task of the consumer to change their ways and governments are going to have an important role in that.

Daniel commented that USS’s engagement with companies didn’t begin and end with the AGM season and that they were in continuous dialogue with companies about a range of issues.  USS fully intends to hold companies to account on the ESG goals they set. David added that USS had had at least 6 meetings with Shell in the last 6 months. He said that energy companies are not in a position to transition to fossil fuel free activity by themselves and that a smooth transition required regulation and infrastructure.  

Brian commented that USS needed to be ‘ahead of the game’ or they would be too late (be holding stranded assets) and that in the next decade the fossil fuel sector would underperform even more than the previous decade.  Simon agreed that USS wanted to position the portfolio to anticipate such changes.

Daniel asked if Ethics for USS would like to make a contribution to the USS press release on June 1st announcing the above decision.  Paul said he would be happy to consider this and would get back to USS quickly.

Member questionnaires and surveys

Naomi reported that the planned members’ survey had been cancelled but that USS was instead planning an ESG focused survey with help from Rob Bauer from Maastrict University who is working on similar proposals for other pension schemes. Naomi said that USS would welcome views on the approach of this survey and the questions to be asked. She also stated that USS are working hard to ensure that  contact details for retired and deferred members are kept up to date

The timescale for the survey was being clarified and USS was aiming to make sure it took place at the best possible time.

Larger Meeting with USS members

Daniel stated that USS were still keen to be participate in meeting with a larger group of USS members to discuss the impact of climate change on the scheme and other matters of concern to members.  He assumed that this would have to wait until larger group could meet.

Paul responded that he thought such a meeting could easily be held using a virtual platform.

Future meetings

Daniel agreed that we should meet again in the future. At this stage he was unable to commit Dame Katharine Barker as she is yet to take up her post as Chair of the Trustees  (takes up role in September) however when she does take up this role he was prepared to put a request for a meeting from Ethics for USS to her.

Other business

David reported that USS were writing to UK government and EU Commission arguing for a ‘greener’ response to the COVID 19 economic crisis (see

Paul thanked USS again for the meeting saying that he felt we had shared objectives and that the main differences were over the speed of change needed.  He recognized that the announcement made today to this group and to the public on June 1st was a significant and exciting change of policy.  He would send the summary of the meeting to USS as soon as drafted.


Ethics for USS to send summary of meetings to Daniel Summerfield for review before distribution

Ethics for USS to send suggested questions for ESG survey to Naomi Clark

Paul Kinnersley and Daniel Summerfield to continue consideration of meeting with larger group of USS members liaising with ShareAction

USS to consider another meeting with Ethics for USS possibly with Dame Katharine Barker when she takes up her role as chair of Trustees in September.

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