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Why is the Environment Regulator Investing Millions in the Most Climate-Polluting Banks?

The Environment Agency vowed that its pension fund would be going green – Byline Times’ analysis suggests this has not been the case

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The main regulator in charge of protecting the environment in England is investing millions of pounds in the most climate-polluting banks – despite vowing to reach net zero, Byline Times can reveal.

Back in 2021, the Environment Agency, which has been at the centre of an ongoing firestorm for its handling of raw sewage pollution in British rivers, vowed that its pension fund would be going green.

It pledged it would “halve the emissions from the over 2,000 companies we invest in by 2030 to get to net zero by 2045”.

But analysis by this newspaper suggests that the “healthy return” for the “world-leading pension fund” is still supported by investment in the companies driving the fossil fuel industry.

The regulator holds £16.5 million in shares of nine of the ‘dirty dozen’: the 12 banks that have been the biggest investors in fossil fuels since the 2016 Paris Agreement, to the tune of $2.89 trillion.


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Those banks have been heavily criticised by climate campaigners for providing financing for the fossil fuel industry to grow its oil and gas extraction operations – despite the impact it has on global emissions.

However, it is far from the regulator’s only controversial investment.

The Environment Agency pension fund also holds some £2.8 million in shares of mining giants, including a sizable stake in Rio Tinto. 

The British-based mining corporation has paid more than $20 million in financial penalties in the past two decades to its American counterpart, the Environmental Protection Agency, according to data compiled by Violation Tracker.

In one case, a Rio Tinto subsidiary was ordered to pay millions in fines after it contaminated groundwater near a mine it ran near Salt Lake City. That same mine faced another suit several years later for breaching air pollution laws for five years causing effects doctors called “similar to smoking 20 cigarettes a day”.

Earlier this month, MPs from across the political spectrum called for the agency to reform its pension fund after it was revealed that the fund had invested millions of pounds into the very water companies it is tasked with regulating.

The fund is also heavily invested in companies producing and using PFAS ‘forever chemicals’ that can cause “almost indefinite environmental contamination” and are linked to cancer in humans.


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The regulator has been in the spotlight over its handling of the dumping of raw sewage into British rivers by the country’s privatised water firms.

A leaked report in late 2022 found that its management was refusing to prosecute in 93% of the cases in which its frontline staff had gathered evidence of serious pollution and pushed for the offenders to face sanctions.

The regulator has also failed to regularly audit water companies to check to ensure they are telling the truth about pollution and illegal sewage dumping.

An Environment Agency spokesperson told Byline Times that its pension fund was “legally separated from the operational and regulatory functions” it undertakes and “subject to different legal rules, governance and decision-making”.

“Our pension fund policy is increasing expectations on companies regarding their management of climate change risks, and our pooling partnership has already identified the banking sector as a key player to target in tackling climate change,” they added.

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