The Essex Pension Fund is among public pension schemes within the Local Government Pension Scheme (LGPS) continuing to invest in fossil fuels, including through little-known infrastructure funds backing the construction of liquefied natural gas (LNG) export terminals in the US. Many of these facilities are located in deprived neighbourhoods, where residents report growing health problems.
Essex County Council’s own environmental policy commits to minimising investment in environmentally harmful activities, including fossil fuels, and their pension fund has set a target of reaching net zero by 2050. Yet the investigation indicates the fund is still linked to fossil fuel expansion via indirect investments in infrastructure funds.
Pension fund investments
Sixty local government pension funds – including the Essex Pension Fund – have collectively invested around £8bn in funds financing the construction of gas export terminals along the US Gulf Coast, according to an investigation by the Bureau of Investigative Journalism.
More than seven million public sector workers, including school staff and civil servants, are members of these schemes. The findings have prompted concern among councillors responsible for overseeing pension investments, particularly where funds have previously committed to reducing exposure to fossil fuels.
While companies behind these projects have benefited financially from geopolitical tensions – including conflict involving Iran – as oil prices soar, their long-term value could be undermined as the global energy system shifts towards renewables.
Counter-arguments
Baroness Hayman, a crossbench peer, told the Bureau: “Many UK pension funds are already reducing their exposure to fossil fuels, recognising the risks these investments pose. But with £3 trillion held in UK pensions, and the climate and nature challenge growing, there is a clear opportunity to better protect savers from rising financial and environmental risks.”
Members of the LGPS have also expressed concern. Jane Thewlis, a retired social worker, says: “The UK could be funding a safer, healthier future for all via renewable energy generated in the UK that is cheap, safe, clean and owned by us.”
A gas boom
The large white tanks used to store liquefied natural gas (LNG) dominate the landscape along the 1,200 km coastline in Louisiana and Texas. Dozens of terminals are being developed there in what critics describe as a construction boom accelerated during Donald Trump’s second term. If all planned facilities are completed, the LNG produced in the US would generate the same level of annual emissions as those of the entire EU, according to Jeremy Symons, a former US environmental regulator.
LNG is often promoted as a “transition fuel”, but some research suggests its emissions footprint can be significantly higher than coal over shorter timeframes.
Essex investments under scrutiny
Savers in the Essex Pension Fund are invested in the IFM Global Infrastructure Fund, which contributed $1.3bn towards the Freeport LNG terminal. The site suffered a major explosion in 2022, with a large fireball highlighting the risks associated with such infrastructure.
The fund is also invested in a major infrastructure portfolio managed by JP Morgan Asset Management. While this includes renewable energy assets, it also holds a stake in Enstor gas, which operates storage facilities in the southern US, and a 50% share in Third Coast, linked to a spill of more than one million gallons of oil into the Gulf of Mexico in 2023.
Other UK-backed projects have also faced scrutiny. One Louisiana terminal funded via infrastructure investment has reported multiple emissions violations and paid financial penalties to regulators.
The activist’s tale
Roishetta Ozane, a local resident turned campaigner, lives near several of the gas terminals. She says pollution from nearby oil, gas and petrochemical facilities has contributed to asthma and rising cancer rates – claims supported by academic research.
“We’re seeing more women develop health issues that are living near these facilities, having pre-term babies or having miscarriages,” she said. “We’re seeing our air quality deteriorate. We have a drinking water crisis.”
She also described noise from construction and the flaring of excess gas. Two of her children have asthma, and she believes pollution may have worsened the seizures suffered by her son, who died last year. “When my son passed away, I was like, what are we doing this for?” she said. “We’re fighting for our children, for our future, for our community, but yet they’re dying.”
The Bureau identified eight US LNG terminals backed by UK pension funds. Combined, these facilities could produce more CO2 annually than the UK itself, several times over, according to Sierra Club data.
Industry response
A spokesperson for IFM Investors said the fund publicly discloses its infrastructure holdings, adding: “Natural gas is increasingly utilised as a transition fuel for decarbonisation globally … These assets benefit from investment from long-term, trusted capital partners like pension funds, who can reinvest in them and pave the way for carbon emissions reduction.”
A greener pension?
Efforts to reduce emissions from pension funds have often focused on divesting from major oil and gas companies such as BP and Shell. However, an increasing share of investments now sits in so-called private markets.
These funds can deliver strong returns but are often opaque, making it harder to track where money is ultimately invested. They are also frequently outside the scope of local authority climate pledges.
As a result, even pension schemes that have committed to reducing fossil fuel exposure may still be indirectly financing large-scale gas infrastructure projects.
Policy and practice
Essex County Council’s Environmental Policy states that it seeks to avoid “environmentally harmful activities (for example… fossil fuels)”. It also operates a Responsible Investment (RI) policy under which environmental, social and governance (ESG) factors are taken into account when making investment decisions.
However, the Bureau’s findings indicate that their pension fund remains exposed to fossil fuel expansion through indirect investments in infrastructure funds backing LNG projects in the US.
While such investments may sit outside direct holdings in oil and gas companies, they still channel pension savings into new fossil fuel infrastructure. The distinction between direct and indirect investment appears to be central to how these exposures arise.
A different approach in West Yorkshire
In February 2024, West Yorkshire Pension Fund announced it would stop lending to the oil, gas and coal sectors. Councillor Andrew Scopes says: “We will still be paying benefits out in 60 years’ time. We need to be looking beyond the possible short-term gains, at the long-term risk.” He added that, under the new policy, investing in funds backing LNG projects would now be “very difficult to justify”.
The fund said its environmental, social and governance policy reflects the current role of fossil fuels in the transition, particularly in relation to reliability and affordability, and described LNG as a “bridge” to a low-carbon future.
Responding to the findings, Essex County Council says it “recognise[s] our responsibility for managing a range of risks faced by long-term investors, including those potentially posed by climate change”, and highlighted its Investment Strategy Statement and Responsible Investment policy. It added that these will be reviewed with stakeholder consultation in 2026.
It did not directly address the specific investments identified in the investigation.
JP Morgan declined to comment. Third Coast and LNG operators did not respond to requests for comment.
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