U.K. local authority pension funds have lost at least £1.8 billion ($2.4 billion) in value since 2017 due to exposure to nine oil and gas companies, research shows.
A report by environmental organization Platform and analysis firm Transition Economics, obtained by Pensions & Investments and set to be published this week, found the value of direct investments in these energy companies by 56 pension funds dropped to £1.8 billion this month, from £3.6 billion in spring 2017.
The three pension funds identified as losing the most value according to the research were the Greater Manchester (England) Pension Fund, which the report estimated had lost £375 million ($499 million) over the period. The fund had £22 billion in assets as of March 31.
The second most-exposed local authority fund was the West Yorkshire Pension Fund, Bradford, England, losing an estimated £211 million due to direct investments in these companies. The fund had £14.4 billion in assets as of March 31, 2019.
Nottinghamshire County Council Pension Fund, Nottingham, England, lost an estimated £81 million, according to the report. The fund had £5.4 billion in assets as of March 31, 2019.
The report added that, despite the expected continued use of fossil fuels in some industries for many years to come, the move toward net-zero will "hit the underlying business model of large oil and gas companies significantly — especially those that rely on high oil prices to turn profits," it said.
The research focused on the top 10 fossil-fuel holdings of the pension funds. It did not take into account exposure through passive funds, so the analysis "likely underestimates overall losses," the report said.
Spokesmen for the West Yorkshire fund declined to comment. Spokesmen for Greater Manchester and Nottinghamshire, and for their respective pension pools, could not immediately be reached for comment.