UN scientists said in September that humans have now emitted more than half the carbon permissible to remain within the 2-degree limit. To meet that target, about two-thirds of proven fossil-fuel reserves must remain in the ground, mostly coal, according to the IEA.
This suggests that investment in companies that are exploiting reserves are overvalued, as any reserves that they find will not be able to to be used anyway – if we are to stick with the 2-degree limit. So it’s not just an ethical question about removing money from fossil-fuel investments, it’s also a financial one. There are campaigns over the world to go fossil free.
Market Forces commissioned The Australia Institute to survey superannuation fund members attitudes towards environmental and ethical investment. A quarter of those surveyed said they would be prepared to change their superannuation fund if their current one was found to be invested in coal mining and coal seam gas. That means out of the nearly $1 trillion of managed super funds in Australia $247 billion could be shifted purely on the basis of environmental concerns of coal and coal seam gas.
One of our subscribers responded to the facebook post claiming that even the ‘deep green’ investment companies invest in coal and coal seam gas.
It gets worse than that. Our Future Fund invests in nuclear weapons. So which other super funds do? Even “Australian Ethical Super” invests in Westpac, who in turn invests in coal and coal seam gas so you’re pretty much stuffed whichever way you turn. The Superannuation Guarantee simply guarantees that you fund earth-destroying industries.
As I have my Super with the company mentioned I decided to investigate further. I discovered that there was truth in what was said. Firstly, according to ICANW – The Future Fund, an Australian Government investment fund, currently invests $227 million in nuclear weapons companies.
With regards to Australian Ethical they do hold investments in Westpac. Westpac in turn do invest in coal as do all of the main banks. Of the big four Westpac invest the least, but not by much. You can see the full response from Australian Ethical at the end of this post.
It seems that even the deepest green investment companies have their faults.
So where should we invest our money?
If all of the big banks are using our money for dirty investments, perhaps we shouldn’t use them? What about supporting local credit unions, who have a greater interest in the local community? Or what about investing more directly in our local community. As Michael Shuman (USA), move your money from Wall Street to Main Street. He spoke in Byron Bay earlier this year about some changes that can be made to make that process much easier.
– Richard Telford
This was Australian Ethical Investments response
Why We Invest In Westpac?
At Australian Ethical, we are respected for having the highest ethical standards for our investments. However, on occasion we receive queries regarding particular companies we invest in.
There was a report published by Market Forces highlighted which banks are lending to companies involved in coastal coal and gas projects. Westpac, along with larger investments from the other big banks, lend about $900 million to some of these projects.
Australian Ethical domestic equity portfolios hold shares in Westpac (but none of the other Big 4 banks – CBA, NAB and ANZ) and whilst the details of the report are not new to us, we continue to conduct extensive analysis of Westpac and believe that our reasons for maintaining our investment are in line with our Ethical Charter:
At the top level we believe the wider banking sector is a positive as it provides individuals and businesses with essential services, in particular access to capital required to purchase a home or develop a business idea.
Whilst we are not happy about the coal infrastructure funding, Westpac have committed a far larger $6 billion in funding to renewable energy over the coming years (www.reneweconomy.com.au/2013/westpac-earmarks-6bn-for-cleantech-and-green-business-funding-33673).
In addition, Westpac has a relatively high proportion of residential and consumer lending compared to the other large banks. This does not include small business lending which would be significant.
Finally, Westpac has a strong group-wide committment to equality, diversity and sustainability.
This view may not suit every investor but we want to assure our clients that we continue to think deeply on all ethical issues. We constantly analyse our investee companies, test our own ethical convictions and engage with companies to improve their behaviour (see our recent engagement with TOMRA).
Why We Invest In Coal?
We decided some time ago that our economy needs to move away from coal as soon as possible, and replace it with more greenhouse-friendly energy sources. We prioritise investment in renewables – if you look through our portfolio you’ll see wind, solar, geothermal, and energy efficiency investments. Looking practically at the Australian energy mix at the moment, we also need an energy source that has fewer emissions than coal, but which we can begin utilizing immediately.
Natural gas is a relatively clean-burning fuel with considerably less pollutants and greenhouse gas emissions than coal – when used as an energy source it results in up to half the CO2 emissions of coal. Natural gas also lends itself more readily to distributed rather than centralized power systems – moving our energy system from a centralized to a distributed model can save up to 20% of generated electricity from being wasted in transmission.
As you’re probably aware, Australian Ethical has taken a strong position on the issue of coal seam gas – see our announcement on the divestment from Origin Energy:
Finally, to put things in perspective, if you do have an ethical issue with fossil fuels you’ll probably find Australian Ethical Super to be aligned with your values more than any other fund. Most other funds invest in Coal and CSG as well as natural gas. We believe we’re the lowest carbon emissions per dollar fund available. Unlike most funds, we also disclose ALL the companies we invest in, and that list is here: http://www.australianethical.com.au/who-we-invest-in.
We have nothing to hide!
I hope this explanation answers your questions – if there’s anything else we can do to assist, please don’t hesitate to get in touch.
Should you require any further information, please visit the Australian Ethical Super website or contact us on 1300 134 337 between 8.00am and 8.00pm Sydney Time, Monday to Friday.
Australian Ethical Super