Pension funds in the UK are financing the rapid expansion of the liquefied natural gas industry in the US through infrastructure funds — even though some of them have tried to divest from fossil fuels because they worsen climate change.
Research by the Bureau of Investigative Journalism shows that 60 UK local government pension funds have invested a total of £8bn in funds that are investing in building LNG plants on the US Gulf of Mexico coast.
Residents say these terminals are already causing health problems in their communities. The gas they process will cause huge carbon emissions when it is burnt, speeding up global warming — a direct contradiction of the climate concerns of some of the pension funds.
The revelations point to flaws in the environmental, social and governance investment system, suggesting even investors that pay attention to climate change can lack sufficient information about the impacts of their investments, fail to act rigorously enough, or do not communicate their ESG impacts clearly to savers.
Some of the funds the Bureau has examined disclose what projects they finance, and some pension funds are aware of this information, but it does not always stop them investing in the funds.
The evidence the Bureau has uncovered is likely just the tip of the iceberg, since many other European pension funds invest in infrastructure funds.
The UK’s local government schemes are an important part of that jigsaw. Over 7m school staff, civil servants and other public sector workers either save with or receive their pensions from these funds.
Some of them have adopted ESG policies, which include trying to lessen their climate impacts.
In 2016 east London’s Waltham Forest Pension Fund, which holds £1.1bn, became the first local authority to make such a commitment, passing a resolution to exclude fossil fuels from its investment strategy.
The council already had green goals to improve the lives of residents, but Simon Miller, a former councillor who chaired the pension fund committee at the time, said “we had a pension fund that was merrily invested in fossil fuels that was absolutely out of lockstep with the political direction and philosophy of the borough.”
The pension fund sold the investments in fossil fuel companies of its directly managed funds over the following five years.
In 2020 the £1.9bn Lewisham Pension Fund in south London committed to moving most of its passive equity holdings, 50% of its total assets, to low carbon investments by the end of 2021, to “support the fight against the climate emergency”.
“As well as the huge environmental impact of fossil fuels, supplies of oil and gas are finite and disappearing and are no longer good long term investments,” said James Royston, chair of the council’s pensions investment committee, in a statement in 2021.
Council pension funds, as well as the local politicians and campaigners urging them on, have tended to focus on selling shares in companies like BP and Shell.
However, in the last few years pension funds have increasingly allocated money to private assets, including private credit and infrastructure funds — encouraged by policymakers, who see this as a way to make stable, long term returns, diversify risk and, when the money is invested in the UK, to stimulate the economy.
Through this channel, savers’ money is entering — and growing — the fossil fuel industry.
Health impacts
Giant white orbs containing LNG dot a 1,200 km stretch of Louisiana and Texas’s coastline. Dozens of these terminals are popping up, in a building frenzy turbocharged by US president Donald Trump’s enthusiasm for oil and gas.
If all the planned terminals are built, the LNG produced in the US will generate the same amount of greenhouse gases each year as the whole European Union, estimates Jeremy Symons, a consultant and former official at the US Environmental Protection Agency.
UK pension funds have supported this expansion for years. In 2019, Stonepeak, the US infrastructure fund manager, put up $1.3bn to complete the construction of the Calcasieu Pass gas terminal in the southwest corner of Louisiana, which came onstream in April 2025. Twenty miles inland, building has started on another terminal also funded by Stonepeak.
UK savers in 12 councils, including West Yorkshire, South Yorkshire and Worcestershire, have invested £360m in Stonepeak funds that financed these plants, according to figures from council records and data provider Pitchbook.
Since starting operations, Calcasieu Pass has reported hundreds of emissions violations and paid authorities a $245,000 settlement.
That is unlikely to make much difference to its owner, Venture Global. Its share price has risen 62% this year, lifted partly by the rise in oil and gas prices since the Middle East war began.
Roishetta Ozane, a Louisiana resident turned activist, lives near both terminals. She told the Bureau that pollution from the nearby gas, petrochemicals and oil infrastructure has caused asthma and an increase of cancer in the area — an account borne out 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 said residents had to deal with noise pollution from construction and the flaring of excess gas from the terminals.
Two of Ozane’s children have asthma. She told the Bureau her doctor said pollution may have exacerbated the seizures suffered by her son, who died last year.
Further down the coast, a huge fireball at Freeport LNG in June 2022 made the risks of these installations vividly clear.
IFM Investors’ Global Infrastructure Fund — which counts among its investors more than 20 UK pension funds, including those of Avon, East Sussex and Aberdeen — paid $1.3bn to help build Freeport LNG in 2013. It continues to hold a stake in the project.
Construction boom
Travelling south, the LNG expansion continues. Right by the Mexican border, NextDecade Corp’s Rio Grande LNG is building a sprawling complex whose planned annual output the environmental NGO Sierra Club estimates will match the global warming potential of 50 coal-fired power plants over 20 years.
Methane, which escapes during extraction, processing and transport of gas, is a much more powerful greenhouse gas than CO2 during its first 20 years in the atmosphere.
Campaigners say the Rio Grande project is already contributing to habitat loss in an area critical for endangered animals such as ocelots, falcons and sea turtles.
Société Générale backed out of leading financing for the controversial project in 2022, Reuters reported.
But construction was able to proceed thanks to $5bn of commitments in 2023 and 2025 from BlackRock’s Global Infrastructure Partners Fund V — which is supported by nearly £200m of UK savers’ pension investments, from Waltham Forest to Greater Manchester.
In total, the Bureau found eight US LNG terminals backed by UK pension money. Taken together, the gas from those terminals would give rise to several times more CO2 emissions every year than the entire UK, according to Sierra Club calculations.
Information flow
Private markets can offer attractive returns to investors. But because money is invested through funds, investors can be less aware of the environmental and social impact of their investments than they would be when holding the shares or bonds of listed companies.
However, in some cases, information is available to investors, should they care to look.
A spokesperson for IFM Investors said its Global Infrastructure Fund publicly discloses its infrastructure equity assets.
“Natural gas is increasingly utilised as a transition fuel for decarbonisation globally,” the spokesperson said. “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.”
Worcestershire Pension Fund has a detailed Climate Change Risk Strategy which "aims to ensure that its investment portfolio will be as resilient as possible to climate-related risks over the short, medium, and long term. For an effective first line of defence, the Fund aims to integrate climate-related factors into the investment process, including the selection of investment managers."
It also intends to reduce the carbon intensity of its portfolio.
Asked about its US LNG investments, the Worcestershire Pension Fund told the Bureau it invests through structures that mean “exposure to any single asset is indirect, limited, and a very small component of a broader portfolio.”
It said the Stonepeak funds it had invested in, which financed installations including Calcasieu Pass, “publishes detailed annual reports and complies fully with statutory disclosure requirements”.
Nevertheless, private assets are often overlooked, or excluded from pension funds’ climate commitments.
The upshot is that even pension schemes that have deliberately reduced investment in fossil fuels have ploughed money into funds financing major gas projects.
According to its latest report, Waltham Forest is still invested in funds managed by Global Infrastructure Partners that have financed Rio Grande LNG and Allete, which owns an 18,000 acre coal mine in North Dakota.
Lewisham Pension Fund has brought down the emissions from its investments since committing to sell its holdings in fossil fuel companies. But it remains invested in the Infrastructure Investments Fund operated by JP Morgan Asset Management, which according to Pitchbook holds over $52bn of assets.
While this fund has substantial investments in renewable energy, it continues to own a 50% stake in Third Coast, an oil and gas pipeline and processing company which spilled over 1m gallons of oil into the Gulf of Mexico in 2023.
Running risks
The Bureau’s investigation linking UK local government pension funds with LNG plant construction in the US has perturbed local councillors who oversee their pension funds and have urged them to get out of fossil fuels.
In February 2024, the £18bn West Yorkshire Pension Fund said it would no longer lend to the oil, gas or coal sectors.
Councillor Andrew Scopes, who sits on an advisory panel for the fund, said its earlier decision to invest in a Stonepeak fund that bankrolled an LNG plant on Ozane’s doorstep would be “very difficult to justify” under its new standards.
Climate change, pollution and harming health are not the only potential downsides. Gas investments could become stranded assets if the world switches decisively to renewable energy.
“We will still be paying benefits out in 60 years’ time,” said Scopes. “We need to be looking beyond the possible short term gains, at the long term risk.”
Members of the scheme were dismayed to find what they were investing in. “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,” said Jane Thewlis, a retired social worker, campaigner and member of the West Yorkshire fund. “We are particularly concerned if [West Yorkshire Pension Fund] is funding LNG infrastructure in the US, which is not compatible with a livable climate. We expect our elected representatives to use our money to fund a safe future — not to hasten the end of humanity.”
West Yorkshire Pension Fund said its environmental, social and governance policy “takes account of the current status and role of gas and oil within the energy transition, particularly with regard to reliability, affordability and coal displacement”.
It said it considered LNG “a ‘transition fuel’ because it is seen as a bridge between today’s fossil fuel‑dominated energy system and a future low or zero carbon one.”
The fund added: “We aim to support [investment] managers who support an orderly transition to net zero, reduce real world harm, and avoid locking in long term emissions. Investment also relies on managers being appropriate stewards of the assets they hold. Our investment criteria include consideration of governance of assets and social outcomes as well as the environment.”
JP Morgan, Stonepeak and Waltham Forest Council declined to comment. Lewisham Council said it could not comment in a pre-election period before the UK’s local elections on May 7.
Third Coast, the LNG terminal operators and other local councils did not respond to requests for comment.
Will bigger mean better?
The news comes as the UK government is making several reforms to laws and rules governing pension funds.
The thrust is to improve value for money and transparency and consolidate schemes into much bigger so-called megafunds, which hold at least £25bn of assets.
The government eyes with envy the large pension funds of Australia and Canada, which have become global investment powerhouses, particularly in private and physical assets such as infrastructure.
In theory, having fewer, bigger pension funds should improve economies of scale, allowing for better governance.
But merging several schemes could also make it harder to maintain individual employers’ decisions to invest their pension funds in an environmentally and socially careful way.
In the reforms, there is little emphasis on environmental and social impact. In a 47 page consultation response, Unlocking the UK pensions market for growth, by the Treasury and Department for Work and Pensions in May 2025, encouraging private markets is mentioned four times, but the words “climate”, “environment”, “social” and “health” do not appear.
Campaigners are pushing for greater attention to climate risk.
Some politicians are worried about these issues. In a debate on the Pension Schemes Bill in the House of Lords in February, peers from several parties raised the issue of pension fund investments in climate-harming companies.
Baroness Hayman, a non-party political peer, told the Bureau: “Many UK pension funds are already reducing their exposure to fossil fuels, recognising the risks these investments pose. But with £3tr 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.”
Josephine Moulds and Simon Lock are senior reporters at the Bureau of Investigative Journalism in London
Map by the Bureau, using Sierra Club data