London has been put to shame by New York’s decision to divest city pension funds from fossil fuel companies, according to climate campaigners who accuse the mayor, Sadiq Khan, of fudging a similar promise he made during his election campaign.

Global efforts to drive investment away from oil, gas and coal were given a major boost last week when the biggest city in the US announced plans to sell off its $5bn holdings in fossil fuel assets and sue the world’s most powerful oil companies over their contribution to dangerous global warming.

As the home of Wall Street, this had enormous symbolic value and added to the momentum provided last year by divestment proposals from the Norwegian central bank (which runs the world’s largest sovereign wealth fund), and the World Bank’s promise to end funding for oil and gas extraction.

The mayor of London - the world’s other great financial centre - has also pledged action. In his manifesto, Khan said he would “take all possible steps to divest the London Pension Fund Authority (LFPA) of its remaining investments in fossil-fuel industries by 2020.”

City Hall has quietly sold off about half of its fossil fuel assets, but divestment campaigners complain that London’s policies are muted, ambiguous and full of loopholes that could be copied by other institutions.



“While progress is being made in the UK, the New York announcement puts some of the commitments, especially London’s to shame and shows what’s possible with good leadership,” said Danielle Paffard of 350.org, the NGO that has spearheaded the global divestment campaign. “Khan has chosen an approach which essentially lets fossil fuel companies off the hook - both with weak exclusion criteria and by refusing to celebrate and make a political statement with it - while appearing to have ticked off one of this environmental manifesto promises.”

Frustration was evident in November, when environmental activists from Switched on London and Divest London disrupted Mayor’s Question Time to protest at the fact that London still has fossil fuel assets worth £69m and its actions are half-hearted.

City Hall says this criticism is unfair because London pension fund investments in fossil fuel companies have dropped from £130m in 12 months to £69m in 2016-17, which contrasts to the $5bn still invested by New York.

“In London the mayor is delivering one of the strongest and most ambitious divestment plans of any world city, as he promised in his manifesto,” said a spokesperson for the Mayor of London. He will ensure the LFPA honours his commitment to divest from fossil fuel industries and implements all necessary divestment by 2020.”



However, the boldness of the move by New York - which follows similar actions in Berlin, Paris, Copenhagen and Sydney - puts pressure on London to set a more ambitious example for other authorities and institutions in the UK.

Local authorities hold more than £16bn of shares in fossil fuel companies, but with a handful of exceptions - such as Southwark and Waltham Forest - few have promised to divest.

Momentum is mixed elsewhere. One-third of UK universities have divestment policies. The Catholic Church has shed record amounts on holdings in fossil fuels and several Church of England bishops have called for investment to be pulled from ExxonMobil because it misled the world about climate change.

Debates continue among many major investors with critics of divestment arguing a shift away from fossil fuels can be technically difficult, financially challenging or less effective than remaining in shareholders meetings and trying to influence policy from the inside.

The UK government is due to remove one major legal obstacle this year by ending “fiduciary obligations” on pension companies to maximise investment returns. Instead they will be allowed to make decision that that “mirror members’ ethical concerns” and “address environmental problems”.

Campaigners hope the pledge by New York mayor, Bill de Blasio, to use the city’s “loud voice and deep pockets” in the fight against climate change will inspire cities, towns, universities, churches and companies to follow suit.