Oct 17, 2014 - 10:54am
Superannuation funds and university endowments can expect to come under continued pressure to reassess their holdings of carbon-intensive assets, The Climate Institute said ahead of tomorrow's Divestment Day events.
"Expectation that 'business as usual' will continue just because Australia's carbon price was removed is looking more and more like a risky strategy for investors,” said Erwin Jackson, deputy CEO of The Climate Institute.
“Global momentum is building to reconsider investments in high emission industries like coal. No amount of spruiking from Australian politicians or businesses is going to change other governments’ and investors’ decisions to factor in the health, economic and climate risks in continued fossil fuel use."
Public campaigns to drive the financial sectors divestment from fossil fuels have grown rapidly in recent years, as have tools for citizen investors to work out how their nest egg savings are invested, such as The Vital Few campaign.
“More and more people are becoming aware that their superannuation savings may be at risk as the world continues to respond to climate change,” Jackson said.
“Other techniques of getting asset owners to address climate risk are also at play, such as rising investment in low carbon assets and engagement with carbon-intensive companies to hedge carbon pricing risk.”
Assessing carbon exposure and risk is the first step, through tools such as the Asset Owners Disclosure Project (AODP), which ranks the top 1,000 asset owners worldwide on how well they are measuring and managing climate risk. The Climate Institute is the Australian agent for the AODP, which is chaired by former Liberal Party leader, John Hewson.
"Australia is a high-carbon economy that needs to clean up its act, not get more bogged down in promoting an economy currently trapped in polluting industries. The over reliance on fossil fuels exploitation isn't good for our economy, our health, our global competitiveness, or are future prosperity as a nation overall."
"Decisions made by the finance sector over the last month would see the reallocation of billions of investment dollars away from fossil fuels towards low carbon assets."
Some of the recent developments include:
- Last week the Australian National University announced that it will shelve its holdings of seven Australian resources companies.
- In the past month, super funds HESTA, Local Government Super, and Anglican National Super have all announced portfolio-wide decisions to quit or curtail their fossil fuel investments, particularly in coal.
- Deutsche Bank, RBS and HSBC have refused to provide loans for the Abbott Point coal port in the Great Barrier Reef Marine Park without UN support.
- Internationally, Rockefeller Brothers Fund has now refused to continue investment in fossil fuels. Stanford University said in May that its endowment funds wouldn't directly invest any more in coal companies, and Glasgow University announced last week it would divest from fossil fuel companies over 10 years. Norway's sovereign wealth fund, the world's largest, is reviewing its stand and will report back early next year.
"In the absence of a credible domestic climate policy framework, investment decisions have become more critical than ever," Jackson concluded.
For more information
Kristina Stefanova, Communications Director, The Climate Institute, 02 8239 6299