The climate emergency continues, with the need for immediate action ever more pressing as conditions worsen, extreme events multiply and tipping points are threatening.
We recognise that USS has set a target of ‘net zero 2050’, achieved some portfolio emission reductions, reports annually on the target, and has engaged with some companies in which USS invests. We acknowledge work with the University of Exeter and the Institute of Actuaries to produce the ‘No Time to Lose’ report and climate scenarios.
However, these actions are undermined when our pension money is still funding fossil fuel companies and their banks. Further action is needed now to avoid social and financial chaos in the foreseeable future:
- more than 115 UK universities have committed to divesting from fossil fuels as part of their response to the climate crisis [1];
- scientific advice – from our own colleagues and international experts – is clear that there must be no new oil and gas projects hereon in order to restrict global warming to close to 1.5 degrees [2];
- nevertheless, oil and gas companies continue to expand production [3];
- nearly four fifths of the UK public are concerned about climate, and say it is important that the UK urgently shifts away from fossil fuels [4].
1. USS’s investments in fossil fuels
USS continues to invest hundreds of millions of pounds of members’ pension contributions into fossil fuel companies. They also invest in the banks that are funding the development of new oil and gas fields. For example, scheme data [5] show that as of 31st March 2025, USS has holdings in
- 30 fossil fuel companies including Shell, BP, Chevron, TotalEnergies and ConocoPhillips; all described as ‘Climate Wreckers’ due to their plans for expanding the fossil fuel industry [6].
- 42 of the 65 banks reported to have lent the most to fossil fuel companies 2021-24 [6];
- These numbers underestimate USS’s investment in fossil fuels as only about 30-40% of their portfolio is in listed equities, with a similar percentage in bonds and fixed income assets, plus significant private market investments.
We do not believe that USS’s arguments for maintaining these investments stand up to scrutiny – USS has claimed that
- they can persuade fossil fuel companies to transition by a policy of engagement with management and shareholder voting (‘Our net zero ambition’). This policy has failed, since major companies that USS invests in, for example BP and Shell, have announced plans to increase production of fossil fuels and reduce renewables spending [2,7];
- their fiduciary duty to members requires them to invest for long-term stable returns (Progressing our journey to net zero). This is a poor argument for fossil fuels, because reports show these investments systematically under-perform the market [8], they promote instability through accelerating climate damage, and there is the risk they will turn into stranded assets;
- a policy of divestment would limit investment choice. USS has already divested from tobacco and thermal coal (Investment changes and new opportunities); and divestment from fossil fuels has been described as ‘a defensive move to protect the long-term value of an investment portfolio while continuing to meet investment return targets’ [9].
- USS are ‘universal investors’, so cannot act alone when global action is needed. In our view, as one of the largest funded pension schemes in the UK, USS should provide more leadership to the UK pensions industry. Moreover, divestment would free up funds to aid the transition to clean energy.
2. Act Now!
We urge USS to
- join other leading pension funds, such as ABP in the Netherlands [10], and over 115 UK universities by immediately divesting from companies that obtain a significant proportion (20%+) of their profits from producing fossil fuels;
- divest from the banks that are financing new fossil fuel projects;
- divest from those major carbon emitters that have no credible plans to decarbonise;
- rapidly increase investment in proven renewable energy technologies such as solar and wind, the industries supplying them, and the industries accelerating the transition.
- publish a shareholder voting policy to require all companies to rapidly transition to clean energy and technology, including voting against the board where this does not happen;
- divest from those companies where USS has voted against the board or CEO on the grounds of the company’s insufficient response to the climate crisis;
- fully consult all members (current, deferred and retired) and member universities regularly on USS’s emission reduction plans and investment strategy, and publish the results;
- exclude from its climate crisis plans contributions to any company’s claimed emission reduction pathways from carbon offsets and unproven carbon capture technologies, as these do not represent reliable means of reducing emissions;
- make clear their planned total emissions pathway and how it is consistent with the Paris agreements;
- publish annual accounts of all USS holdings, following the lead of pension funds elsewhere.
DivestUSS July 2025
References:
[1] https://peopleandplanet.org/fossil-free People and Planet June 29th 2025.
[2] Net Zero by 2050: A Roadmap for the Global Energy Sector, International Energy Agency May 2021; New fossil fuels ‘incompatible’ with 1.5C goal, comprehensive analysis finds, Carbon Brief 23rd October 2022.
[3] The 2024 Global Oil & Gas Exit List: More Loss and Damage Ahead, Urgewald, Global Oil and Gas Exit List media release: 12th November 2024.
[4], https://www.statista.com/statistics/426733/united-kingdom-uk-concern-about-climate-change/ Statista, October 21st 2023, Share of respondents who are concerned about climate change in the United Kingdom (UK) in 2023
[5] These are public equity holdings, as listed on the USS website. https://www.uss.co.uk/how-we-invest/where-we-invest/public-market-investments accessed on 29/06/2025. (Note: USS will periodically update this page, usually quarterly).
[6] USS Investments in fossil fuel companies listed in the ‘Climate Wreckers’ Index are here along with the Banks reported to be major lenders to fossil fuel companies.
The “Climate Wreckers” Index is made up of the 190 publicly-listed companies worldwide with the biggest plans to expand the scale of the fossil fuel industry. https://www.marketforces.org.au/campaigns/super/climatewreckersindex/
“Banking on Climate Chaos” lists the 65 banks responsible for the largest contributions to fossil fuel financing.
[7] BP shuns renewables in return to oil and gas, BBC News 25th February 2025; Shell abandons 2035 emissions target and weakens 2030 goal, Carbon Brief 14th March 2024.
[8] Clean Energy Investing Global Comparison of Investment Returns, Imperial College Business School: Centre for Climate Finance & Investment (March 2021); Another bad year – and decade – for fossil fuel stocks, Institute for Energy Economics and Financial Analysis January 27, 2025.
[9] https://ieefa.org/fossil-fuel-sector-has-lost-its-investment-rationale Institute for Energy Economics and Financial Analysis June 25th, 2025.
[10] https://europeanpensions.net/ep/The-Netherlands-largest-pension-fund-sells-all-its-liquid-fossil-fuel-investments.php European Pensions May 30th 2024.