University pensions and coal
The USS pension scheme and the coal industry
by Bill Spence
The Universities Superannuation Scheme (USS) is the largest private pension scheme in the UK by assets under management (shares and other investments). It has £76.8bn of assets and over 500,000 members from the university sector. It is a leading player in Europe. It is also a major player in fossil fuels.
The sale and use of coal is a major contributor to climate change. USS says it has divested from those companies that earn more than 25% of their revenue from thermal coal mining. This makes a useful headline but how does it measure up in reality?
USS remains invested in 43 of the biggest coal companies in the world, amongst those listed on the latest Global Coal Exit List.
A review of the data held on these 43 companies reveals extensive investments by USS in companies producing or burning coal – by far the dirtiest fossil fuel in terms of carbon emissions. It is notable that USS has no restrictions on investing in coal-fired power, which provides a major source of demand for thermal coal mining.
So USS can continue to invest in any company that makes anything up to 100% of its revenue from coal, as long as less than 25% of its revenue is from the actual mining of coal. All revenue from coal-power generation and coal services (e.g. exploration, processing, trading, transport & logistics, equipment manufacturing, coal-related maintenance and engineering services, coal-to-liquids and coal-to-gas production) is acceptable under USS’s policy.
The data show that:
- USS invests in NTPC (India) – the company with the 5thhighest coal expansion plans in the world (23,899 MW).
- USS invests in 17 companies with coal share of revenue at over 20%, with 9 over these having share over 30%. It is possible that some of these investments are in violation of USS’s policy.
- USS invests in 24 companies with coal share of power production at over 20%, with 18 of these having share over 30%.
- USS invests in firms responsible for thermal coal production of 250 Mtonnes annually. Glencore is responsible for 40% of this (99.6 Mt) and just five companies for 90% (Glencore, BHP, AGL, NTPC and RWE).
- USS’s investments in the 43 companies can be estimated to be worth well over £450m.
- USS invests in Duke Energy –one of the biggest power utilities in the United States. Duke wants to keep power plants such as its Gibson power plant, the second largest in the country, operating until 2038 in clear contravention of the Paris Agreement and 1.5°C,
- And finally, USS invests in Glencore – the 11thlargest coal producer in the world and the biggest one based outside China, India or Russia. Glencore is also an egregious example of bad USS investment on more than one front. We reviewed this company’s history of crime and fossil fuel devastation in 2023.
Glencore’s cavalier approach to the climate effects of its operations continues. Global Coal Exit List’s has summarised this approach as follows:
Switzerland’s Glencore is one of the world’s largest thermal coal producers. GCEL data shows the company produced 99.6 Mt of thermal coal and 19.9 Mt of metallurgical coal in 2024, with mines in Australia, South Africa and Colombia. Glencore has absolutely no intention of phasing out its coal production. In its 2024-2026 Climate Action Plan, Glencore explained that it dropped its coal production cap, because it “may now only serve to cause confusion“. Glencore admits in the same report that its “targets are not aligned with the IEA NZE scenario”. The IEA NZE 2050 scenario is a globally renowned framework by the International Energy Agency. It lays out how the world can stay below 1.5°C. Instead of acting on climate change, Glencore dismisses the IEA NZE scenario as “increasingly unrealistic”.
Other major pension funds have a far better, and cleaner, approach to investing in coal – for example, Nest, the workplace pension scheme set up by the UK government, now exclude companies with any revenue from thermal coal (both mining and power generation) unless they have a clear and credible plan to phase out these activities by 2030. Why can’t USS follow suit? Minimal actions would be to include power generation from burning coal in its restriction and to get out of Glencore, with its appalling track record and crystal clear commitment to mining and selling as much coal as possible irrespective of what damage it causes.