The largest private pension scheme in Britain, the Universities Superannuation Scheme (USS), sought to prevent a groundbreaking lawsuit alleging its failure to establish a credible plan

for divesting from fossil fuels. The £82 billion ($103 billion) pension scheme faces legal action from two of its members who argue against its ongoing investments in coal, natural gas, and petroleum.

Although the lawsuit was initially blocked by London's High Court last year, the two academics involved in the claim appealed to the Court of Appeal on Tuesday, potentially paving the way for similar legal actions against other pension funds.

The plaintiffs aim to initiate a derivative case on behalf of USS against its directors, a legal strategy previously utilized by environmental law charity ClientEarth in a case against Shell.

During the Court of Appeal proceedings, the claimants' legal representatives emphasized the "significant and increasing" financial risks posed by fossil fuel investments to USS, which they argued the directors have failed to address adequately. In court filings, lawyer David Grant stated that the fossil fuel investment market will diminish over time due to international law, political pressure, and market forces.

However, lawyers representing USS contended that the case should be dismissed as the scheme's investments in fossil fuels have not caused any financial loss to either USS or the two academics involved. Such loss is typically a prerequisite for a derivative lawsuit to proceed.

USS had announced its ambition to achieve net-zero emissions by 2050 and, in March, pledged to vote against responsible directors whenever feasible. The pension scheme claims to have invested approximately £1.9 billion in renewable energy.

Notably, USS directors recently voted against the reappointment of Shell Chairman Andrew Mackenzie at the energy giant's disrupted annual general meeting last month, which was targeted by climate activists. Photo by Bjørn Erik Pedersen, Wikimedia commons.