ESG Enforcement Tracker

Two university lecturers issued proceedings in the UK High Court against the University Superannuation Scheme Ltd (USSL), a corporate trustee of the private pension scheme for academic staff – the University Superannuation Scheme (USS) – and its directors. The claimants are contributors to the USS pension fund, which is considered the largest private pension scheme in the UK.

The claimants alleged, among other things, that the directors’ continued investment in fossil fuels without a plan for divestment was in breach of their duties to act for proper purposes and to promote the success of the company. The claimants alleged that these breaches of duty had prejudiced, and continued to prejudice, the interests and success of USSL and that USSL had suffered loss as a consequence.

The High Court dismissed the claim. The judge was not satisfied that there was a prima facie case that USSL had suffered any immediate financial loss as a result of the directors’ failure to devise a plan to divest from fossil fuels. He also found that the claimants did not suggest that there was any causal link between the investment in fossil fuels and any losses that they had suffered. The judge considered that the directors’ investment decisions were well within USSL’s discretion given that the directors had taken legal advice, conducted a survey of members, adopted an ambition of achieving Net Zero by 2050 and adopted policies for working with the companies with which it invests.

The decision was appealed. The Court of Appeal granted permission to appeal and a hearing took place in June 2023. The Court of Appeal handed down judgment in July 2023, dismissing the appeal on all grounds.