Churches, superfunds & universities search for greener investment pastures

Investments

Australian superannuation giant Hesta has announced it will be restricting its investments in thermal coal operations. “This ‘unburnable carbon’ is likely to become an increasing risk in the medium to long term, especially for companies heavily invested in thermal coal, or those seeking to develop new long-term assets” said Chief Executive Officer Anne-Marie Corbuoy in a statement on Friday.

Hesta, a fund representing 785,000 members and 155,000 employers in the health and community services sectors, is one of few institutional investors accounting significantly for climate change impacts on their long term investments. Not only has the $29 billion superfund decided to limit its direct association with thermal coal projects, it has announced that it will not invest in any newly listed companies that derive more than 15% of revenue from exploration or production of thermal coal.

With a focus on environmental risk, Hesta has now joined a number of national and international organisations that have recently been looking at a long term boycott of fossil fuel investments, in order to mitigate their own carbon footprint. Surprisingly, it is religious organisations that are taking a lead in this strategy. The Uniting Church of Australia holds significant financial reserves. Over the last ten years their funds under management have grown from $400 million to over $1 billion, and in July of this year the Church’s executive voted to divest its coal producing investment portfolio. In the same month the World Council of Churches (representing over half a billion Christians worldwide) announced plans to fully divest its fossil fuels investment portfolio, and the Anglican Church of Australia passed a motion encouraging their own divestment plans. Not to be left out, the Catholic Church of Australia is in discussion over their own environmental investment policies and now Pope Francis is leading the charge, asking the Vatican to divest. As Thea Omerod, chair of the Australian Religious Response to Climate Change (yes it exists) stated, “a whole swag of church organisations have pledged to divest, or are considering it. They’ll be coming thick and fast”.

Around the world, 30 city councils have initiated their own plans to divest fossil fuel investments, including Dunedin Council in New Zealand and the Portland and San Francisco Councils in the USA. 13 US colleges and universities have followed suit, and only two weeks ago The University of Sydney announced its plans to suspend further investment, pending a review of its ethical investment policies.

Unfortunately there has been negative spin put on this over the last six months. Brendan Pearson, CEO of the Minerals Council of Australia said that this trend is merely “an environmental campaign dressed up as investment advice”, and that it is “hard to see how making these super fund options less diverse could improve their long-term performance”. He further stated in an interview in March this year that “[coal] will be the low-cost global energy source for decades – transforming economies and helping eliminate poverty”. Whilst access to energy is a significant barrier to economic development, this is a tenuous strategic argument when compared to the stronger divestment arguments of better informed corporate parties.

Surprisingly, it is one world’s leading coal producers that has defended the importance of climate change.  Harry Kenyon-Slaney, Head of Rio Tinto’s Energy portfolio spoke last week about the importance of low emissions power generation for coal (including carbon capture and storage), and that “no power generation technology could be neglected, be it solar panels, nuclear or shale gas”.

Simon Sheikh’s article in the Green Lifestyle blog today provides a well written review of the divestment argument, and is in favour of the benefits that can it can bring. Additionally, if you are thinking of divesting your own investments in favour of greener pastures, Fossil Free is an organisation that can help you do this, and negotiates with energy providers, banks and superannuation companies.