Meeting between USS and USSDivest October 2021 (Post 2)

Following a sampling of ten universities, on how easy it is to find out what fund choices are open to DC members, USSDivest made the following requests at the meeting:

Overall, the meeting was very positive, with USS responses largely in favour of our suggestions.    

  1. USS provides standard information about DC choices, to be placed on University websites
  2. Training (webinar or similar) for University pension officers (before January 2022), providing information about choices is not providing financial advice

USS says ‘Overall, we and employers prefer that information signposts to the USS website, where we can ensure things are kept up to date.  However, in the run up to the proposed expansion of DC we do intend to undertake some activities with employers, including (i) some training sessions on DC, especially what members can do with their DC pots; (ii) employer comms that will complement member comms being sent and (iii) run an employer webinar informing them of the changes and the impact this will have for their members and what they need to do.  All of these should give employers confidence to provide support to employees, but ultimately it will be up to them to decide what sort of engagement they are willing to have– and some may prefer to simply signpost to USS if they are concerned about inadvertently offering advice.’

USSDivest response ‘The training for Pensions Officers and increasing member communications are good steps. However, the effectiveness of simply sign-posting to the USS site depends on whether the latter is clear about the existence of ethical funds.’

  1. USS to inform members when they cross threshold and join DC scheme, including information on fund options

USS says ‘We are aware of this issue, and one of our reasons for shifting our communications to direct to member and digital is the ability to send this type of trigger communication. We are currently investigating how we do this practically, and hope to be able to confirm timings shortly.  We will be limited in terms of the content of these communications by the Privacy and Electronic Communications Regulations we referred to, so will be relying heavily on directing people to the website and My USS to find out more.

Note that separate to these individual level triggers, if the changes to benefits proposed by the employers go ahead, there will be a standalone campaign to engage affected members, which will include helping them understand their fund options.

USSDivest response ‘This is very positive indeed – though again, provided the USS website is clear about the ethical funds options.’

  1. Review of USS website pages to improve clarity and ‘hit rate’ for searches for ‘ethical’ and cognates

USS says ‘We regularly review the USS website, and overall think the new site and the Investment Builder main page is the appropriate place to route members wanting to know more about the DC aspects of their pension.  However, we are considering a few specific changes currently which could further improve this:

  1. Moving the fund information and ethical fund guidelines to the main website rather than being behind log in (this should be a relatively quick change)
  2. Potentially adding a sub-page on fund options (currently there are drop down boxes/faqs covering the availability of ethical options

We will also look at the search performance, but note that it is used by a very small proportion < 3% of website visitors and v few of these searches relate to investment.

USSDivest response ‘Both of these are positive. A sub-page would be of particular use. Selecting an investment option is one of the primary benefits of being in the Investment Builder section, so members would appreciate this being highlighted.’

  1. Members’ statements to highlight information about where funds are invested and how funds perform

USS says ‘Our approach to the AMS (annual member’s statement) largely mirrors the government’s regulations on simpler annual benefit statements, which limits the detail on fund choices.  However, we think that our plans to move statements online will help members to easily link from their statement to the relevant information on My USS, where they can explore further and take action.

USSDivest response ‘We only agree partly: if USS have room on the page for a statement about where to find fund options, they have room to state where people are currently invested. We agree that more detailed descriptions are not appropriate, since they need contextualizing’

  1. A ‘Members’ Briefing’ about the change in DC threshold and fund options

USS says ‘Whilst we are still in the member consultation phase and not yet in a position to confirm details, we will be supporting members through the changes, and that will include written materials, videos and webinars that will help people understand their choices if they will then be building (more) DC savings. 

USSDivest response ‘We await further details on this’  

It is hoped to have another meeting with USS in January 2022

October Meeting with USS

Ahead of our meeting with USS in October which focussed on communication with members in the DC part of the scheme (who have the choice of an ethical fund for their contributions) we conducted a survey of how information is provided to members about these choices. This could become even more important if the changes to the funds proposed by USS and UUK go ahead in April 2022 as the threshold for entry into the DC scheme will be reduced from £ 59 000 to £ 40 000.

We are of course of the view that USS should divest its whole fund from fossil fuels, weapons and other investments that harm others and we are opposed to the proposed changes to the scheme.

This is the report on our survey:

The Challenge

USS Members Survey 2020 (Maastrict University) showed:

  • Strong support amongst respondents for ‘Sustainable’ investment of their pension
  • Nearly 50% support sustainable investment even if this affects financial performance
  • But over 40% of respondents in DC scheme not aware of the ethical option, and, of those who knew of it, over 40% were not sure whether they were in it
  • (And note: ‘Ethical’ fund outperforming default fund for each of past 4 years)

From April 2022, DC contributions threshold changing from £59 k to £40 k, meaning many more members will be in DC scheme

Increase in DC members and lack of awareness of ethical option likely to lead to 

  • poorer levels of satisfaction with USS
  • potential challenges from members who missed investing in such high-performing funds
  • missed opportunity to encourage ethical investment

USS’s stated position is that When a member is automatically paying into this section on salary above the threshold, they must select the funds they wish to use as early as possible. USS cannot issue notifications to those whose earnings exceed the threshold because of a pay rise and will place contributions into the default funds if the member does not make an election through their My USS login’ (response by USS to Cardiff’s Pensions Officer).

The annual member’s statement 

  • is a simple, two-page document, and sent to the home address. So it is probably the only document most USS members review each year. 
  • On p. 2, it asked: ‘where are your savings invested?’ 
  • And answered: ‘Register or log in to My USS for a breakdown of the funds you’re invested in, and how they relate to your Target Retirement Age’.
  • There is nothing else.
  • So there is no mention of the ethical funds, and further admin to find out where one’s funds are invested.

We therefore selected ten universities to investigate, asking members in them to 

  1. sample their own university’s webpages to find out what information is presented there about the DC scheme and fund choices
  • contact their pension officers and ask if members are informed by them or payroll about fund choices when they cross the DC scheme earnings threshold
  • look at the USS webpages and to comment about the presentation of information on the DC scheme fund choices. 

Responses from:

Cardiff, Kings College London, Edinburgh, Open University, Leeds, Sussex, Stirling, Oxford, Dundee, Glasgow

Task 1: sample your own university’s webpages to find out what information is presented there about the DC scheme and fund choices

‘There is no information that you can choose the fund for the DC scheme and therefore no information about ethical choices’ (Glasgow)

‘I looked at the university website and could not find any information about DC scheme funds for those in USS’ (Leeds)

‘Nothing – and Sussex is aiming for most sustainable Uni in the world’ (Sussex)

‘There isn’t much (information) – just seems a bunch of links back to the USS website’ (Dundee)

‘No mention at all about the ethical funds – not even links to them – despite us declaring a climate crisis in 2019, and divesting in 2020’ (Cardiff)

Task 2: contact your pension officers and ask if members are informed by them or payroll about fund choices when they cross the DC scheme earnings threshold

‘The University doesn’t know how much of a USS member’s contribution is paid as it simply pays the total member contribution. Therefore members are not notified if the DC threshold is exceeded’ (Open University)

‘Sussex does not contact people when they cross the threshold and includes no information about ethical choices’ (Sussex)

‘We are not allowed to provide any financial advice nor steer members towards any specific investment type’ (KCL)

‘I emailed the pensions officers and they responded: “Fund information is available at WWW.USS.CO.UK.” so didn’t provide any direct information’ (Oxford)

‘I have been told repeatedly that there are no specific ethical fund options with USS, only to look at the USS responsible investment page’ (Leeds)

‘The two pensions officers I corresponded with did not know whether Cardiff contacted members. The chief pensions officer eventually confirmed that Cardiff does not’ (Cardiff)

Task 3: look at the USS webpages and to comment about the presentation of information on the DC scheme fund choices. 

‘Ethical pension options were not mentioned on the search listing’ (Leeds)

‘I found the USS guide to investing in the Investment Builder v useful but it could be more obvious’ (Stirling)

‘I’d like to know more about (fund choices) without having to log on (to MyUSS) but on logging on to MyUSS I’m told there are two options for ‘Do it for me’ but not that one of these is an ethical option, and after hours of clicking links … I am left confused about which parts of my pension are invested where. My conclusion is that information is better on the USS site than the university site but still obfuscatory in places’ (Leeds)

‘When I went on the USS website, I found it incredibly difficult to find anything about the Ethical Funds’ (Dundee)

‘Difficult to find out the existence or performance of the ethical funds without logging on to MyUSS, and then it takes persistence and knowing what to look for when I do’ (Cardiff)

Additional comments

‘When I asked the pensions dept whether I could make additional voluntary contributions I was told this wasn’t possible’ (Leeds)

‘…colleagues think pensions are complex and they don’t want to think about it, so they are happy to go for the default (mostly unethical options)’ (Leeds)

‘I hadn’t realised how easy it was to switch funds’ (Stirling)

Actions suggested by USSDivest to USS BEFORE the change in the DC threshold (April 2022) 

  1. USS provides standard information about DC choices, to be placed on university websites
  • Training (webinar or similar) for university pension officers (before January 2022, to allow for queries from members before the April deadline), providing information about choices is not providing financial advice
  • USS to inform members when they cross threshold and join DC scheme, including information on fund options
  • Review of USS website pages to improve clarity and ‘hit rate’ for searches for ‘ethical’ and cognates
  • Members’ statements to highlight information about where funds are invested
  • A ‘Members’ Briefing’ about the change in DC threshold and fund options

Outcomes (to be measured end of 2022)

  1. 100% of pension officers and university websites provide clear, correct information about the fact that that DC members can choose funds
  • 80% of a random sample of DC members to show they are aware that there are fund choices and know which fund they are in

Changes to the DC Scheme

The recent announcement by the JNC that the threshold for the DC scheme will be reduced from £60k to £40k on 1/4/22 means that many more than the current 37% of active members will suddenly join the DC section. We think this presents a real opportunity to raise the level of awareness among USS members of ethical lifestyle funds since DC members can choose which fund their contributions go into. (I know these changes are not good for members and opposed by many but the proposed implementation date is April 1st 2022 so we have to start planning for the change even if also opposing it)

The member survey conducted last year found that among DC members approximately 40 % were not aware of their choice of funds, and of those who were, another 40% or so didn’t know which fund they were in. Since the ethical funds have outperformed the default option for the last four years, perhaps USS has a fiduciary as well as ethical reason to raise awareness, and hence, member satisfaction.

We are trying now to persuade USS to improve the way that it communicates with members in the DC scheme about the options they have to invest their pensions. This has been described by USS in previous meetings as ‘low hanging fruit” and we have good reason to think they may take action. However USS will not make the ethical fund the default so we have to persuade them to inform members about their choices better.

Currently USS does not inform members when they cross the DC threshold so we need to find out what individual universities do.  This could have a strong impact on USS. So I need your help with this small task:  

  1. sample your own university’s webpages to find out what information is presented there about the DC scheme and fund choices
  2. contact your pension officers and ask if members are informed by them or payroll about fund choices when they cross the DC scheme earnings threshold
  3. look at the USS webpages and to comment about the presentation of information on the DC scheme fund choices. 

Then send me a brief summary as to how you get on (  Please do this by end of this week.

We are asking USS for an urgent meeting to discuss improved communication about DC fund choices and we need some case studies of the problems outlined above

I will collate, report back and compile a report for USS.  Increasing the numbers of DC members who choose the ethical fund is an important step forward.

Thanks Paul Kinnersley, Co-ordinator Ethics4USS/USS Divest

Summary of Meeting with USS (January 2021)

Below is a summary of the meeting between USS and Ethics4USS held on January 21st. This meeting was primarily to discuss the results of a survey of members conducted by Maastricht University in October 2020. The survey showed strong support for sustainable investment from members – with many respondents happy to have smaller financial returns as a consequence. Another striking result of the survey was that many members in the DC part of the scheme who can chose to put their contributions into ethical funds were either unaware of this option or unsure if they had made this choice or not.

Here is the meeting summary:

Summary of Meeting between USS and Ethics4USS/DivestUSS January 21st 2021


USS                  Daniel Summerfield, Head Corporate Affairs

David Russell, Head Responsible Investment

Naomi Clark, Head Investment Product Management

Dean Blower, Head Strategy and Insights

Ethics4USS      Ceri Sullivan, Cardiff University

                        Charlotte Rae, University of Sussex

                        Emily Heath, University of Lancaster

                        Glen Consquer, University of Edinburgh

                        Kat Thorne, Kings College London

                        Paul Kinnersley, Cardiff University (retired)

Maastrict University   Katrin Godker, Postdoctoral Researcher, Department of Finance

Introductions: All introduced themselves and Ethics4USS thanked USS for continuing these meetings.

The Survey on Ethical Investing conducted by Maastrict University

USS introduced the survey – USS were particularly interested in why take up of Investment Builder ethical funds had been lower than expected since 2015; they wanted to explore options rather than just excluding classes of assets when developing new products; and they wanted to explore different forms of choice architecture used to offer ethical funds.

Katrin then gave a report on the conduct and initial results of this survey.  The survey was designed by a team at Maastrict who are particularly interested in how people’s views on ‘Sustainable Investing’ align with their actual behaviours.

The survey was sent out to active members in October and there were no reminders or repeat mailing shots.

Around 4000 members responded – approximately 2% of total members and a similar response rate to previous surveys – the respondents were similar in age, gender proportions to that of the overall population of active USS members though their incomes were slightly higher. 

Amongst respondents there was strong support for ‘Sustainable Investment’ even if this meant that funds performed less well than alternatives – over half thought that sustainability should be taken fully into account even if this affected their pension and a further fifth thought it should be ‘mostly’ taken into account.  This view was strongest amongst young, female, academic and less well-paid members. Respondents were generally altruistic, future oriented and not risk adverse. 

Regarding awareness of ethical options within the DC scheme, about half of respondents were in the DC section of the scheme, but only 58% were aware of the option to invest in ethical funds.   Moreover 42% did not know whether they had taken up an ethical option or not. There were good levels of satisfaction with the Ethical Fund option from those respondents who had made this choice.

Regarding excluding specific categories of investment being excluded from the USS portfolio there was limited time for discussion but there were clear messages that majorities of members supported divestment from tobacco, fossil fuels, companies that abuse human rights and other criteria measured in the survey.


  • Ethics4USS (E4U) asked about the survey’s definition of ‘the future’ – it should have been clear that members may have concerns for future generations. USS agreed to take this discussion further with Glen.
  • Ethics4USS thought the survey response rate was lowered by members’ workload during the Covid pandemic.
  • E4U thought the advertising of the survey was limited. Katrin explained the need to avoid survey bias and USS explained the need to balance surveys with other important engagement messages.
  • Ethics4USS asked about when the survey results would be published.  Katrin said that the academic research behind the survey results was likely to be published publicly in 2021, and offered to share with Ethics4USS Maastrict’s report for USS, later this year.
  • Ethics4USS thought the DC figures (re. 1. awareness of the option of ethical funds and 2. whether or not one had selected them) suggested an opportunity for USS to increase knowledge of and investment in them, hence increasing member satisfaction. Importantly, the data also demonstrated there was a wider appetite for such funds, including among DB members, who cannot opt into the ethical funds.
  • Ethics4USS argued that since members’ views on ESG investing are changing fast, USS needs regular surveys of active, deferred, and retired members on this. USS agreed, but said that the 2021 annual survey of members did not include such questions. Ethics4USS thought all such surveys should do so in order to understand members’ responses to the rapidly changing ESG landscape. Also this may increase member engagement and satisfaction.
  • Ethics4USS argued that the results should enable USS to move towards more ethical investing and to divest from certain groups of investments. USS said the trustees’ fiduciary responsibilities limited the application of non-financial factors (member views) to investment decisions. Note: the relevant USS policy is outlined in the scheme’s statement of investment principles – paragraph 1.4.7


  • E4U argued that restricting the option of ethical investment to the DC section contravened EDI, since lower earners were more likely to be young, female and less likely to be white. USS said that investment choice was not allowable where DB benefits were being accrued and that the single hybrid structure of the scheme (DB/DC split, with a salary cap of £59k before members started accruing standard benefits in the DC section) is not the remit of the USS Trustees but of the Joint Negotiating Committee, of which UCU and UUK form.
  • E4U asked for details of divestment plans to be shared with university sustainability committees. USS agreed to have a separate conversation regarding this with Kat.
  • E4U asked what the Trustees had decided to do, in response to the survey. USS said they were still considering the results, but changes to communication with the DC members was one likely action, as well as considering how the ethical options could be developed further.

On behalf of E4U, Paul thanked USS and Katrin for a very helpful meeting, and that we looked forward to meeting again in approximately 3 months’ time.

Three questions for USS and two disappointing answers

So we recently asked USS three questions and we have now received their answers:

Q. As a 10% owner of Heathrow Airport is USS supporting the building of a third runway despite the recognition that it would lead to a dangerous increase in carbon emissions and that further investment is risky as Heathrow could become a stranded asset

USS’s response- Since 2018, LHR has offset emissions to be carbon neutral for the energy used in terminals [since 1990 they’ve almost doubled the number of passengers whilst also making a 93% reduction in carbon emissions]. They are committed to working towards zero carbon emissions from their terminal and fixed infra by 2050 and to work with partners to deliver zero emissions at the airport. As part of the development consent process for the new runway, LHR will have to comply with the requirements of the Airports National Policy Statement in relation to carbon. This includes ensuring that expansion must not result in an increase in carbon emissions so significant that it would have a material impact on the ability of Government to meet its carbon reduction targets, including carbon budgets. LHR’s long-term aspiration is to make growth from the new runway carbon neutral. This would mean that growth in emissions from additional flights after expansion would be offset through carbon credits – resulting in no net growth in emissions. Their aspiration also applies to emissions from ground transportation for passengers and employees and the embodied carbon that would result from construction of our new runway. Heathrow has also signed Prince Charles’ Terra Carta initiative (  and is working with the aviation sector and government (it was in the national infra strategy) to develop sustainable aviation fuels which significantly reduce co2 emissions. Re: Stranded asset – Prior to COVID-19 Heathrow has been operating at full capacity for a number of years and there is significant excess demand from airlines to operate out of Heathrow.  A strong aviation sector is critical to the economic recovery in the UK and the UK’s aspiration to develop new trading links around the world.  We expect aviation demand to return in the UK but are committed to ensuring that growth in aviation is sustainable. We do not believe that decarbonisation and growth in aviation are mutually exclusive and are working hard with our co-shareholders and management team at Heathrow to deliver both.

Q. What is the current level of USS’s holding in British American Tobacco?  In June last year USS committed to exclude tobacco holdings from the portfolio.  However the USS website list of 100 top investments only reports the holdings as of September 2020 and continues to show holdings of £ 75 million in BAT.

USS’s response – Although we set ourselves a year two year target to divest from our tobacco holdings,  I am pleased to report that we have sold all our equity exposure in BAT and the residual credit investment will be gone by the next quarter. 

Q. What is USS’s view of the HSBC AGM shareholder resolution filed by ShareAction and others (combined US$ 2.4 trillion in assets under management) calling on HSBC to publish a strategy and targets to reduce its exposure to fossil fuel assets, starting with coal, on a timeline consistent with the Paris climate goal? Has the resolution been discussed by the trustees and if so, what was the outcome of the discussions?

USS’s response – The resolution does make some good points, and we have already attended one meeting with the company to discuss the resolution and associated issues.  However, the company has not formally responded or provided their proxy response so it’s difficult to take a voting position at the moment. We will keep this under review.

The answer on tobacco (Q2) poses the further question as to why USS can exclude tobacco but not fossil fuels from their portfolio. USS claims that the decision to exclude tobacco is based on financial not ethical grounds. We believe that future investment in fossil fuels is likely to be financially risky and that these investments should be excluded on the same grounds.

Ethics4USS is going to urge USS to meet with ShareAction (Q3) – since, if they are prepared to meet with HSBC, it seems reasonable that they hear the other side of the argument for this resolution.

Summary of Meeting with USS October 27th 2020


Dame Kate Barker, Chair USS Trustees 

Dr Daniel Summerfield, USS Head of Corporate Affairs

David Russell, USS Head of Responsible Investment 


Brian Hoskins , retired member, Grantham Institute, Imperial 

Sue Blackwell, deferred member, Birmingham 

Ceri Sullivan, Cardiff 

Ellie Harrison, Dundee 

Charlotte, Rae, Sussex 

Andrew Jarvis, Lancaster 

Paul Kinnersley, retired member, Cardiff 

Introductions – All on the call introduced themselves and Ethics4USS thanked USS for their time and willingness to meet.

It was agreed – as with previous meetings – that all details of the conversation would be kept confidential until a summary had been agreed and that this could then be distributed. USS commented that they felt that Ethics4USS had a useful role in holding USS’s ‘feet to the fire’ in terms of highlighting the financial and ethical risks of aspects of their investment strategy.

USS then provided some introductory words describing the difficulties of balancing the financial demands of investment decisions along with the ethical issues around investment.

Investments and the Climate Emergency

Ethics4USS started this discussion by describing their main concern as the financial impact of the climate emergency.  They asked for comments on how ESG factors should be taken into account with regard to the overall investment strategy.  In response USS described what was felt to be a shift in companies approach to ESG but also that there was a need for government to lead on infrastructure changes to enable a low carbon economy to develop. USS also pointed out that the Trustees had a fiduciary duty to get good financial returns and that USS could not invest in something simply because it was a ‘good thing’ they had to consider the financial returns. USS recognised the concerns about ‘stranded assets’ as governments and consumers moved away from carbon intensive industries.

In response Ethics4USS echoed some of the frustration with the government but warned that our CO2 emissions now will affect the climate for the next 1000 years.  The last time temperatures were this high, sea levels were 6 metres higher.    It was great that the UK has given a commitment to net zero; now China and today Japan have given similar commitments.  Coal has got to be phased out.  We already have enough oil and gas and we can’t burn all that we have.  Very strong moral imperative to act now, not in 10 years’ time.  As Mark Carney has recognised, there is now also a very strong financial imperative – you have to be ahead of the game or you will be left with the old industries while it’s the new ones which are the successful investments.

Ethics4USS commented that they knew that USS has tried hard to engage with companies like Shell, but Shell were continuing to drill for gas in the Arctic.  

Ethics4USS went on to say that they wanted to celebrate the selling-off of fossil fuels since March and stated that they would continue to hold USS’s ‘feet to the fire’ and publicise any reversal of that position!  It was noted that Cambridge University has recently committed to divest its funds (£ 3.5 billion) by 2030 and Ethics4USS urged USS to set out a similar timeline.  Ethics4USS commented that they will start to focus on where money is put into creating new capital assets, especially creating new fossil fuel resources – as those are the biggest risks.  The private investment portfolio represents a third of USS assets and there is no information of where that is going.

USS responded to these comments by saying that they felt there was a transition away from fossil fuels.  Governments around the world are committing to net zero but how they get there is important.  All the research says we will need oil and gas while that transition happens.  USS continue to invest in oil and gas but are also investing millions in renewables, but it can be difficult to find those companies – they need to make appropriate returns.  

Ethics4USS pointed out that USS sold off about a billion worth of fossil fuels since March and that this shows that there are alternatives invested opportunities – not necessarily in renewables.

USS responded that USS had transitioned out of a very concentrated portfolio.  The carbon footprint for the equity portfolio as a whole has historically been lower than the benchmark.  The plan now is for a “transition portfolio” leading into one with an ESG underlay built into it, a “quant-ESG fund”.

The Young Member’s perspective

Ethics4USS raised the particular concerns of Younger Members of USS. Investments across the board, not just in fossil fuels, will underperform if we don’t address climate change.  This is very likely to happen in the lifetime of members now in their 20s and 30s and they are increasingly  worried that their pensions won’t deliver.  Ethics4USS reported that in their view Cambridge, one of the most prestigious institutions in the country, was doing the right thing by divesting. USS as a prestigious pensions institution should do likewise.  The question is WHEN.  The government will follow if we lead; you create a legislative mandate.

USS responded that they were aware of the risks of stranded assets but that they also had to think about generating income to fund pensions today.  USS has sent out a survey to all members to seek their views on sustainable and ethical investment.  However it was also important to appreciate that they have to deal with a difficult valuation right now.

The Sustainable Investment Questionnaire

Ethics4USS welcomed the questionnaire that had been sent out to members and thanked USS for for including the ‘big’ questions like “are you prepared to take a higher risk?”  Ethics4USS commented that the survey tested respondents’ knowledge of USS’ ethical funds and whether members have acted on that and that this would be valuable.  Ethics4USS supported the sending of it to all members and involved UCU in its distribution.  They asked to know when and where the results will be published, whether the results would be discussed by the trustees and what the threshold would be for members’ views on an investment category to influence investment decisions (including exclusion from the portfolio)?

USS responded that the results will be published when the University of Maastricht have completed their analysis. USS reported that the trustees were keen to consider the results and USS would be happy to discuss the results with Ethics4USS.  They were keen to use the information in the most meaningful and impactful way – by for example making comparisons between different groups (young and old members).

USS felt it was difficult to set a firm threshold for responding to members’ views. However, if a significant majority of members were in favour of exclusion of an investment category the trustee would have to consider this seriously. 

USS reported that the Trustees were due to discuss the survey results at their December 2020 meeting and suggested that USS meet again with Ethics4USS in January 2021 to discuss the survey results.  

Ethics4USS responded that they would be keen to meet with USS in January so thanked USS for this offer and for the very helpful meeting.

USS Survey on Sustainable/Ethical Investments

USS is conducting a survey on ’Sustainable and Ethical Investment’.  As you may know, to date USS has had major investments in fossil fuels along with armaments and tobacco. They have agreed to divest from tobacco but need to hear from members that we want them to divest from fossil fuels, armaments and other sectors that cause harm.   To achieve this we need a good response to the survey.  The survey was sent out in the latest Members Update or can be found here  Please complete the survey and encourage many others to do so.  Many thanks

Big changes in USS top 100 listed equities

We have just observed major changes in the list of ‘USS top 100 equities’ on the website (   In total these represented over £ 1 Billion disinvested from carbon intensive industries. This appears to be a massive change in investment strategy and one that we believe is in line with the views of most USS members.

In summary the changes are:

Shell was £ 498 million now £ 122 million

Pioneer was £ 119 million now not in top 100

Lundin was £ 110 million now not in top 100

EOG was £ 114 million now not in top 100

Equinor was £ 107 million now not in top 100

Reliance was £ 75 million now not in top 100

Petroleo Brasil was £ 72 million now not in top 100

CNOOC was £ 72 million now not in top 100

Gazprom was £ 56 million now not in top 100

Zurich airport was £ 257 million now not in top 100

Ryanair was £ 131 million now not in top 100

So has USS divested over £ 1 billion from carbon intensive industries?? The changes appear bigger than those that would result simply from the share prices going down as a result of the financial impact of the pandemic.  It’s possible that USS are making short term sales and will buy back the shares in the future however USS say the list of holdings is posted each March and October so the changes could have been made 3 months ago (though web page says updated 27 days ago).  

We are cautiously optimistic that USS has recognised the financial and environmental risks of the oil and gas industries and think they should be congratulated on these changes. We will watch carefully to see if oil and gas investments creep back in to this list in the future.

And finally – the holding in Raytheon – who make missiles to carry weapons amongst other things – has also gone down – from £ 209 million to £ 80 million so more good news!

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.

Why is the UK’s largest pension scheme still investing in fossil fuels?

Article from Times Higher Education (June 10th 2020) by Bill Spence

The Universities Superannuation Scheme’s recent announcement that it will “exclude, and where necessary, divest” from tobacco companies, thermal coal and some weapons industries is welcome but long overdue.

Members may be surprised, for instance, that it took 70 years for the discovery that cigarettes cause lung cancer to translate into a decision from the UK’s largest pension fund by assets to withdraw its £190 million support for the industry. They may also be surprised that the fund, currently worth £75 billion, ever even considered financing the production of cluster munitions, white phosphorus and landmines.

But the really critical issue is that the USS continues to actively promote industries that are accelerating the climate emergency. The announced disinvestment in thermal coal is pure greenwash as the fund does not appear to have any holdings that would be affected. More revealing is what isn’t mentioned in the press release: the more than £1.3 billion that will remain directly invested in supporting oil and gas companies, plus large fuel-intensive infrastructure investments such as 10 per cent ownership of Heathrow Airport.

Keep in mind the context. The United Nations has given us little more than a decade to drastically reduce our use fossil fuels or risk much more disastrous global heating that we have already seen. In response, more than half of UK universities have committed to divesting from fossil fuels. Yet these divestments are dwarfed by their huge contributions to the USS – whose largest single holding, according to members’ group divestUSS, is an enormous £ 500 million in the oil company Shell.

The USS argues that the most effective way to ensure changes in climate impact is by engaging with such corporations at annual general meetings. But documents on the USS website itself show that in every single motion relating to climate change at Shell AGMs since 2010, the USS has voted with the company. This includes repeatedly voting against setting corporate targets in alignment with the Paris Climate Agreement; on the most recent occasion, in May, the USS explained that it “didn’t want to undermine [Shell’s] management team”.

USS CEO Bill Galvin presents this all differently. He writes that a “ground-breaking” example of the effects of USS pressure is Shell’s announcement of plans to reduce its carbon emissions by “around half” by 2050. But the 2018 UN climate report highlights that carbon pollution needs to be cut to zero by 2050 to keep warming to 1.5 degrees, while Shell is actually forecast to increase oil production by 38 per cent during the next decade. This at a time when the company is reportedly far behind its own very limited targets for investing in green energy and the oil industry as a whole commits just 1.3 per cent of its capital expenditure to low-carbon technologies.

In response to criticism of its investment strategy, the USS cites its key legal duty to underwrite future pensions. Its head of responsible investment argues that this rules out divestment from particular companies or sectors for ethical reasons alone.

But even discounting ethics, the accelerating climate crisis means that fossil fuel investments are not even a good medium-term bet. The world’s largest fund manager, BlackRock, is lowering its overall exposure to them, stating that “we are on the edge of a fundamental reshaping of finance”. Shell has recently cut its dividend – previously the largest in the FTSE100 – by a swingeing two-thirds. The huge USS investment in Heathrow already looked ill-judged in February, when the airport’s expansion plans were ruled illegal and in conflict with the government’s climate commitments. And the pandemic has shattered the airline sector, with experienced investors like Warren Buffet dumping all their vast holdings in it. All of this will surely give the USS’ new chair, Dame Kate Barker, much food for thought when she takes over in August.

While the USS appears rather cosy with companies like Shell, it struggles to engage with the members whose money it is investing. During the 2018 strike by university staff against plans to shift the USS to a defined contribution scheme, the fund’s managers failed dismally to persuade members of the validity of their financial assessments (their image was hardly helped when a professor of medical statistics who had consistently criticised the valuations was removed from the USS board last year). Staff were again on strike this year, with pensions one of the key issues; the current use of their money by the USS may not help in persuading them to increase contributions.

When the next annual climate crisis conference, COP 26, is held in Glasgow in 2021, the world’s eyes will be looking to see what leadership the UK has been showing. The country’s academics have been playing a leading role in understanding and reacting to the rapidly developing climate emergency; they deserve a lot better than having their pension savings used to support the businesses driving this crisis.

It is high time that the UK’s largest pension fund stopped the greenwashing and got clean out of fossil fuels.

Bill Spence is professor of theoretical physics at Queen Mary University of London.