Greens wanted the city council to press for for Lothian Pension Fund (LPF) to sell its shares in what they described as an industry on its way out – but councillors voted overwhelmingly against the move.
Labour’s Maureen Child said she used to take the same view as the Greens – “let's stop owning shares in tobacco, the arms trade and now fossil fuels”.
But she said: “I very quickly realised this is virtue signalling and it’s no way to make a real difference. Simple divestment is no mean to achieve any constructive outcome. To sell shares there has to be a buyer - that buyer will be unlikely to care two hoots what the company gets up to.”
She said LPF did believe in engaging with companies whenever concerns arose on environmental or social matters.
Green councillor Claire Miller argued LPF had already recognised investment in fossil fuel companies was not desireable in the long term by agreeing not to invest in companies which went against the Paris agreement.
And she said: “If the LPF maintains its current investment in fossil fuel companies then when the value of those shares decrease, the fund will be left with shares it can’t sell without a loss. Alternatively, if LPF divests early, before the run on oil and gas speeds up, beneficiaries will be protected. "The fund should be investing in infrastructure projects which are crying out for capital investors and provide stable long-term returns.”
Fellow Green Gavin Corbett said the proposal was not about a moral position on fossil fuels. "This is about the financial responsibility of continuing to invest in an industry which is absolutely on its way out. There's a real danger that the fund is left behind as other funds increasingly recognise the truth about the financial prospects for fossil fuel investment.”
Lib Dem Neil Ross insisted engagement worked but divestment did not. "Selling up would be a negative step in the battle against climate change."
And Tory Cameron Rose said when the Greens proposed divestment at the LPF committee the strongest opposition came from members of the fund, both employers and beneficiaries. "What they have said very forcefully is 'Keep your hands off our pensions’.”