Climate Change

Dirty pensions: Climate activists know nothing about their investments in gas and oil

Anyone who puts their money into pension funds risks profiting from climate-damaging corporations in Germany as well – unknowingly. An international and local investigation led by CORRECTIV reveals connections for the first time.

by Annika Joeres, Elena Kolb, Justus von Daniels

July 10, 2023

Benjamin Roth and Alix Otten don’t know each other, don’t speak the same language, and they live almost 700 kilometres apart. But they are connected through a business which deals with unimaginable sums of money – and neither of them had the faintest idea about it until recently. One is affected by the business because the chemical company Currenta is polluting his garden in Leverkusen, Germany. The other because her pension is in part financed by this chemical company. Our research makes the connection between these two people – and many others – visible. In different ways they are tied to ever-growing pension funds that invest millions and billions of dollars all over the world – often in corporations that prop up the fossil fuel industry.

In order to be able to pay out large amounts of money, pension funds are increasingly investing money in shares, real estate and private equity funds. But where does this money, in which we are investing our retirement hopes and dreams, actually come from? In the financial jungle of international markets, the fact that our pensions are in part fuelling industries that are harmful to the climate is often obscured.

CORRECTIV has traced some of the international routes pension money takes. Only recently, we were able to make transparent the German federal states’ investments in foreign fossil fuel corporations such as BP and TotalEnergies.

Now, thanks to collaborative research with international and local partners, CORRECTIV can show that the system also works the other way around: pension funds from the US, Canada and the UK invest their money in German chemical corporations, German oil drilling fields and fossil fuel companies – to the annoyance of some of their unwitting investors.

45-year-old Benjamin Roth lives not far from the Currenta chemical park in Leverkusen. From his home he can see the incinerator’s steadily growing mountain of waste; it already rises thirty metres above the ground, eventually it will reach seventy. “Currenta has prioritised economic interests”, he says. According to Roth, the company wouldn’t bother with transparency about the processes on the Chempark side.

The Chempark of Currenta has been weighing on Roth’s mind the last two years more than ever before.

In July 2021, seven workers were killed in an explosion there. His wife rang him when it happened, saying, “The chemical plant just blew up”. Roth was in nearby Cologne at the time, working at his job as a tax officer. All motorways were closed, he couldn’t get to his family, so his wife had to hole up on her own in the house with their five-month-old son and three-year-old daughter, darkening all the rooms. They waited in a thick cloud of smoke; when the cloud cleared, everything was covered with soot particles.

Benjamin Roth Resident from Leverkusen, Germany

»Currenta has prioritised economic interests.«

Currenta operates a chemical park in Leverkusen covering almost five hundred hectares, one of the largest of its kind in Germany. It is a production site for chemical giants such as Bayer and Evonik. Currenta provides the necessary infrastructure for the disposal of the chemical waste. In July 2021 the waste heated up so much that it produced extreme overpressure, resulting in the explosion that terrified Benjamin Roth’s family. So far, the company has not been proven responsible for the catastrophe – yet there was great indignation on the part of the German population and in some areas of government. There was outrage, for example, at the fact that the company pumped toxic firewater into the Rhine after the explosion. The German “BUND”, an environmental NGO, filed a complaint.

Residents like Roth complain about the company’s lack of transparency in communication. Currenta itself claims it has initiated “a large number of different communication channels” for citizens.

Currenta has also been criticized by environmental groups on different grounds: the company relies on fossil fuels for its energy supply in the chemical park. They operate several coal and gas-fired power plants there.

Currenta made British pensioner Alix Otten feel “dirty”

Currenta is a company that 74-year-old pensioner Alix Otten from Manchester would rather have nothing to do with. While Roth looks out onto Currenta’s waste dump, Otten sees vegetables growing in her garden: potatoes, peas, parsnips, beetroot, and soon tomatoes. Only wheat is missing, otherwise the vegetarian can feed herself from her produce. She lives modestly, and tells us how she does not want to harm anyone with her lifestyle.

And yet it is also thanks to Otten’s money that the chemical park in Leverkusen can operate at all. As an employee, Otten paid into the Greater Manchester Pension Fund. This in turn invested in a fund belonging to the investment banking company Macquarie. Macquarie Asset Management holds all of Currenta’s shares. Today, Alix Otten receives part of her modest pension from the Greater Manchester Pension Fund: around £300 per month.

Alix Otten Pensioner from Manchester, UK

»I feel dirty.«

The fact that Otten gave part of her money – albeit indirectly – to Currenta, pains the pensioner. “I feel dirty”, Otten says. If there was a way for her to get out of this pension scheme, she says, she would.

Cooperation
For this research we collaborated with international and local partners. The Anti-Corruption Data Collective, a nonprofit organisation by academics, data scientists, civil society representatives and journalists, helped us to research the investments of international pension funds in Germany using a combination of open and protected data, which it matched with data on German power plants. Our British colleagues at the nonprofit The Bureau of Investigative Journalism (TBIJ) spoke with British pensioners who were completely unaware that their pensions are benefiting from polluting industries in Germany. The local media partner Die Rheinpfalz Landau did research around the oil drilling in Speyer and Radio Leverkusen talked to residents near the chemical company Currenta.

All over the world, pension funds invest the money of teachers, policemen and civil servants. They invest in common funds, publicly traded companies such as Coca Cola, or other financial assets such as government bonds. The financial impact of these funds is huge: 38 trillion dollars are invested by pension funds in the global financial market. This is an almost unimaginable sum, exceeding the GDP of even the richest countries in the world such as the USA.

These investments are also keeping fossil fuel projects alive which prevent us from meeting global climate targets. Many large corporations on the stock market are fuelling the climate crisis: according to one study, the 60 largest banks on the stock market alone invested around 700 billion dollars in tar sands or Arctic oil mines in 2021.

German coal yields international returns

In this investigative collaboration, we came across nearly 30 international investors and a handful of international funds investing in German gas and coal-fired power plants. And around 200 local pension funds from the UK and North America profit from oil projects and coal and gas-fired power plants in Germany according to our research at CORRECTIV. The fact that the German government has been able to hold on to fossil fuel energy supplies for so long has therefore also been indirectly enabled by these investors.

Currenta’s coal and gas-fired power plants in the company’s three chemical parks are not the only ones being financed by these funds. Public workers from Florida are partly paying for the chemical company Röhm’s gas-fired power plants. Civil servants from South Yorkshire invest indirectly in the Bayernoil oil refinery. In the past, teachers from Texas also invested indirectly in the chemical company Evonik and its coal-fired power plants.

British pension funds invest £10 billion in fossil fuel projects worldwide

The data on pension funds we worked with for this research is just the tip of the iceberg. We do not have complete information on investments by international pension funds in Germany. In addition, of course, pension funds invest in fossil projects in many other countries. However, our British partner TBIJ was able to find out that public pension funds from the UK invest around £10 billion in fossil fuels worldwide, even though many of them have made climate pledges.

Canadian climate activist unwittingly helping to finance oil drilling

Because of the broad distribution of money from pension funds, it becomes difficult for individuals to understand exactly where their money is going. It’s hard to track investments in chemical corporations or fossil fuel companies. Moreover, it is often not the pension funds themselves that invest the money or buy companies that are harmful to the climate or the environment. There are usually private equity funds in between who invest the money on behalf of the pension funds. Their investments are even less transparent. Their investors often can’t see which industries their money, which is supposed to end up providing them with an adequate pension, is flowing into.

Canadian Meghan Ecclestone, for example, had no idea that the Canadian Pension Plan (CPP) which she paid into was also invested in a fossil fuel company in Germany until she spoke to CORRECTIV:

Every month, about 500 Canadian dollars flow from Canadian Meghan’s salary into the pension fund CPP.

Like Meghan, approximately 21 million Canadians pay their pension contributions to the same fund.

The CPP in turn invests the Canadians’ money in private equity funds, among others. One such fund is CVC Capital Partners VI, with headquarters in Luxembourg. ($650 million).

CVC Capital Partners is one of three major shareholders in Neptune Energy Ltd. in London, UK.

Its subsidiary Neptune Energy Germany drills for oil and gas in Germany.

The extraction of crude oil is generally associated with countries such as Saudi Arabia or the United Arab Emirates. But, while politicians in Berlin and Brussels are grappling to find ways of reaching a fossil-free future, there are companies actually drilling for oil in Germany. Although they extract much smaller quantities than abroad, the venture still seems to be worthwhile for companies like Neptune Energy in the UK: with around 300 active wells in Germany, the company generated around 660 million euros in sales last year. This makes Neptune Energy Germany’s second-largest oil producer, according to its own figures, and it is even planning further wells, one of them in Offenbach an der Queich in southern Germany. But it’s a plan that’s meeting with resistance.

Oil drilling planned in “Energy Community of the Month”

Wheat is still growing on the unremarkable field, located off the road to Offenbach, which is to be the site of oil extraction in the foreseeable future. Next to the wheat field stands Susanne Roth, who just happens to have the same name as Benjamin Roth from Leverkusen.

Susanne Roth simply can’t believe it all. “How credible can a government be that wants to get away from fossil fuels and then allows something like this to happen?” says the 70-year-old. Roth has lived in Offenbach an der Queich for more than twenty years. Together with her husband she opened a veterinary practice there to treat farm animals such as horses and cattle. Now her daughter works in the practice, while Roth herself devotes much of her time to the citizens’ initiative “No oil from Offenbach”.

Oil well plans: concerns about water

“My heart beats for agriculture”, Roth says. That’s the main reason why she opposes the planned oil well. Not only would an agricultural area have to give way for the drilling. Roth is also concerned about the groundwater in the region. For years, she says, water levels in the area have already been sinking – and oil production uses up a lot of water. She is also afraid that the groundwater will be polluted. The Rhine Graben is an earthquake zone, and movement in the ground could cause pipes to leak, she warns.

And then there’s the increased traffic the oil well would bring with it. Because if a well is drilled, the crude oil from Offenbach will have to be transported by truck to a refinery.

»We’ve just redeveloped the main road here in town, and there’s a primary school there. It would be very dangerous.«

Susanne Roth Climate activist from Offenbach, Germany

Local politicians are also angry

Roth is not alone in her concerns. Local politicians in the region are also angry. Both the local town council and the municipalities council have spoken out against oil drilling. “Offenbach was voted Energy Community of the Month at the end of last year”, says the community’s mayor, Axel Wassyl. That doesn’t sit comfortably with being the location of an oil well. At the moment, Offenbach is waiting for the submission of the main operating plan for a so-called “exploratory well”. This plan still has to be approved by the responsible State Office for Geology and Mining in Mainz.

But it would not be the first time that an oil well has been approved in the region. In Speyer, Neptune Energy and its partner Palatina GeoCon have been extracting oil for more than 15 years. Confronted with the concerns of local residents, a press spokesman for Neptune Energy replied that “from the consortium’s point of view (…) no negative environmental impact or danger to people or buildings is to be expected”. The press spokesman justified the oil drilling in the middle of a climate crisis with the claim that “the oil is a resource (…) used for example in wind power and photovoltaic plants” and thus “is an important and indispensable enabler of the energy transition”. However, oil is only used to a small extent – if at all – in renewables, for production or as a lubricant. The majority of these fossil fuels goes into industry or petrol.

China also involved in investment in German oilfieldt

Just a few weeks ago, it was announced that Neptune Energy was to be sold to the Italian gas group Eni - but the German business, including the investment in the Speyer oil field, remains in dubious hands: The Chinese sovereign wealth fund CIC owns 49 percent of the British group Neptune Ltd, which in turn owns the German subsidiary Neptune Germany. The Chinese fund is Neptune's largest shareholder.

The search for gas and oil in Germany is thus being driven by a group that is significantly influenced by Chinese interests. In addition to Speyer, Neptune is primarily active in Emsland and Salzwedel. The German government did not respond in detail to a question about whether the Chinese investment in oil production in Germany was fraught with risks. According to the Financial Times, Eni’s takeover plans explicitly stipulate that the German business should remain with the existing investors.

Canadian Meghan Ecclestone had never heard of Neptune Energy Germany until she spoke to CORRECTIV. Despite the fact that payments from salaries like hers is what makes the fossil fuel company’s business possible: about $500 Canadian dollars per month flow from her account to the Canadian Pension Plan.

Ecclestone works as a librarian in the Canadian city of Guelph, an hour from Toronto. She says she feels very close to nature. With her two children and husband, she enjoys taking bike rides in the area. In her spare time she is involved in the Canadian climate justice network “For our kids”. That makes her all the more upset when she hears about her pension fund’s fossil fuel investments.

»It must be so frustrating for people trying to save their town. People organising against Neptune Energy, knowing that Canadians are sitting on the other side of the world who have no idea what’s being done in their name.«

Meghan Ecclestone Librarian from Guelph, Canada

The problem: the lack of transparency in the financial market

But something can be done, she says, in fact it must be done. She has now written an email to her pension fund manager: she wants him to explain how he plans to get out of fossil fuels. Perhaps it is the first of many emails that Ecclestone will write. Maybe it’s the start of a movement.

“We are seeing the first trends of larger pension funds withdrawing from fossil investments”, says Loriana Pelizzon, head of the department for financial markets at the Leibniz Institute SAFE in Frankfurt. One positive example is the Dutch pension fund ABP. It is Europe’s largest pension fund, and it stopped all fossil investments after pressure from its clients. Ultimately, however, Pelizzon believes it is primarily up to policymakers to use tax instruments to make fossil investments permanently unprofitable. With some funds, you can choose whether fossil companies should be part of your investment or not. There are now studies according to which fossil-free investments yield just as high or even higher profits than their fossil-fueling counterparts, which could mean that in the long term, pension funds would have to withdraw from Currenta, Neptune and Co.

Translation: Ella Norman

Credits

Text and investigation: Annika Joeres, Elena Kolb and Justus von Daniels
Research partners: Leon Iselt (Radio Leverkusen), Andreas Schlick (Die Rheinpfalz Landau), Josephine Moulds and Nimra Sahid (TBIJ)
Design: Nina Bender
Fact-Checks: Gesa Steeger
Communication: Luise Lange-Letellier, Charlotte Liedtke, Maren Pfalzgraf, Valentin Zick
Video: Ivo Mayr
Published on: July 10, 2023

Dirty pensions: Climate activists know nothing about their investments in gas and oil

A pension for you,
thanks to a toxic chemical plant

»Currenta has prioritised economic interests.«