The National Trust Becomes the Latest to Ditch Fossil Fuels

The National Trust, the UK and Europe’s largest conservation-based Charity, has this month declared that it will be divesting from all of its fossil fuel investment positions. Even though the investing in these positions is an important part of the Trust’s investment strategy, it has decided that the Oil, Gas, and Coal industries’ movement into greener technologies has not been quick enough, nor extensive enough. In this post we shall look at the Trust and its investment strategy a little closer, and position this recent movement against the backdrop of an increasing shift away from fossil fuel investment.

Founded in 1895 and given statutory powers by the National Trust Act 1907, the National Trust has a number of clear mandates. According to the 1907 Act, which has been updated several times since, the Trust exists to promote ‘the permanent preservation for the benefit of nation of lands and tenements, including buildings, of beauty or historic interest, and as regards lands for the preservation, so far as practicable, of their natural aspect, features and animal and plant life’. This societally vital aim has led to the Trust becoming the leading conservation-based charity in the UK and Europe, and sees it conserving nearly 800 miles of coastline, nearly 250,000 hectares of land, over 500 historic houses, castles, ancient monuments, parks and nature reserves, and close to one million objects and works of art. With more than 5 million members, the Trust has grew into a financial powerhouse with its decisions carrying great weight within the investment arena.

As a result, its £1 billion investment portfolio and the way it is invested, makes the headlines. Last year, The Guardian reported that the Trust, despite its conservation-based mandate, had invested more than £30 million into companies such as BP and Shell. This past week, however, the Trust has declared that it is starting a period of divestment from the fossil fuel industries, with the vast majority of that divestment plan expecting to be completed within 12 months and the entirety of the plan to be completed within 3 years. Whilst recognising the need to grow the investment pot in order to provide the resources required to meet its mandate, the Director General of the Trust, Hilary McGrady, stated that ‘the impacts of climate change pose the biggest long-term threat to the land and properties we care for, and tackling this is a huge challenge for the whole nation’. In line with this aim, the Trust announced that it was making a renewed push in investing in Green start-ups and portfolios that benefitted nature. The Trust’s Chief Financial Officer did acknowledge that fossil fuel companies were investing in renewable energy, but that ‘after decades’ worth of lobbying not enough has been done by the oil and gas companies, and for that reason we’re looking to withdraw our investment’. The divestment is notable in that it is the Country’s largest conservation-based charity that is divesting but, in reality, the Trust only holds less than £50 million in investments within the sector.

However, this is just one more part of a growing movement. In 2015 the Church of England and its Ethical Investment Advisory Group began divesting from the sector, while earlier this year Norway’s massive $1 trillion sovereign wealth fund announced that it would be moving towards investing in renewables rather than Oil and Gas. According to The Independent, Insurers are making real waves in the sector having pulled more than $3 trillion in recent years, with further Insurers lining up not only to pull their own investments, but to stop the underwriting of fossil fuel-related projects, such as coal-fired plants. Couple this with the developments within the PRI (Principles for Responsible Investment) and the recent adoption of the Poseidon Principles, as was discussed recently here in Financial Regulation Matters, then the picture of the near future is an increasingly green one. It would be extraordinarily premature to suggest that such a powerful and well-resourced industry is likely to disappear anytime soon, or even bow to the pressure and make a concerted move into the renewable marketplace, but the tide is ever-so-slowly turning. As for the National Trust, it is positive that it seeks to align itself with its mandate, but also the general will of its membership. The Trust signifies a crucial element within society, in that it is vital that we preserve both the wildlife and nature that we have been afforded, but also the history of the country and the many beautiful and fascinating objects and monuments that are in the UK. Whilst preserving the investment pot in order to allow the Trust to do that is important, reducing the negative impact that climate change will have on that same wildlife and cultural history is far more important.

Keywords – National Trust, Investment, Business, UK, @finregmatters