2021 | Riddhi Mehta-Neugebauer
Despite alarming findings by the United Nations and others that climate change signals "code red for humanity", private equity firms continue to acquire fossil fuel assets and expand long-lasting infrastructure. And many labor pensions continue to invest in private equity.
To assess private equity's role in exacerbating the climate crisis and its use of labor's retirement capital, the Harry Bridges Center for Labor Studies has issued a new report, Power in a Pension: Labor, Private Equity, and the Climate Crisis.
The report is informed by panelists at a first-of-its-kind forum the Bridges Center hosted on May 19, 2021. The forum brought stakeholders together to discuss how labor unions, pension fund trustees, and Indigenous rights and grassroots organizations are working to effect change and explore avenues for further collaboration. Pension fund trustees and representatives of dozens of investors and asset managers with more than $10 trillion in combined assets participated in the forum.
Findings in the report highlight the Wet’suwet’en community’s ongoing resistance to private equity firm KKR’s Coastal GasLink Pipeline (CGL) through their territory in British Columbia, Canada.
“This project threatens our water, our livelihoods as Wet’suwet’en people, and the future for our Wet’suwet’en children. We will never stand down and will continue to resist this project and others like it, that do not gain consent from our people. It is a bad investment that will never see the returns that pensioners deserve,” said Wet’suwet’en leader Sleydo’ (Molly Wickham).
The report reinforces findings that although publicly traded fossil fuel companies face pressure from shareholders to cut emissions and sell assets, private equity firms continue to acquire those assets, thereby negating any progress on climate impacts and exposing investors to greater climate and investment risks. Greater transparency on private equity-owned energy assets will help pension funds steer clear of private equity’s greenwashing tactics—efforts that tout the private equity firm’s environmental and sustainability commitments, but fail to disclose the extent of their environmental and community harm.
To reduce the risk of simply shifting fossil fuel assets from public pension funds’ public market portfolio to their private market portfolio, where fossil fuel extraction and operations can continue with little oversight, the report calls on public pension fund trustees, many of whom are labor union members and state elected officials, to advocate for better climate-related reporting and disclosure.
