Former national director of GetUp Simon Sheikh with backers including Simon Holmes a Court, has launched Australia’s first fossil fuel free superannuation company, Future Super, a move that could start to unravel carbon intensive investments and unleash a more than $240 billion walk-out from coal and coal seam gas investments.
The announcement made on Thursday morning comes as signs grow that the divestment movement could soon have critical mass, and it’s spooked the mining industry, which in recent days has called for a powerful campaign to turn back the tide of what it has termed “green imperialism at its worst”.
This week Australian Ethical Investment announced record profits and record new members, and divestment campaigners 350.org and Market Forces launched Super Switch, a tool to encourage shifts from superannuation funds invested in fossil fuels. The University of Sydney and AMP are some of the major institutions calling an end to investment in carbon intensive fossil fuels.
Future Super has a leadership team that includes Jemma Green, a former vice president of JP Morgan and adviser to global research group Carbon Tracker; and James Their, a founder of Australian Ethical Investment and the Responsible Investment Association of Australia.
Bendigo Bank is a shareholder in the company, and fund manager is Grosvenor Pirie.
Trustee is The Trust Company.
Executive director is Adam Verwey a founder of the fund, who worked with Australian Ethical Investment for nine years.
Other key financial backers and supporters include Simon Holmes A Court who built Australia’s first community wind far, Jane Morton and Simon Jane who have been involved in the Quit Coal campaign, Caroline Le Couteur a former Member of the Legislative Assembly in the ACT for the Greens party.It is understood that a bigger financial services group could emerge, including an ethical and fossil free bank and products such as mortgages.
Hard to know what funds invest in
Mr Sheikh said a key issue with Australian superannuation and investment funds is that specific investments in fossil fuels are not disclosed.
“Even funds that are marketed as ‘ethical’ or ‘sustainable’ are still investing in coal and coal seam gas,” Mr Sheikh said. Industry commentators say that in general the fund managers tend to preference returns ahead of qualitative weightings aligned to ethics or environmental concerns, believing that this is what members want.
But not all superannuation members are the same, it seems.
Research by The Australia Institute last year found 25 per cent of Australians were willing to shift their superannuation into a fund free of coal and coal seam gas and estimated the value of such a shift at potential $247 billion dollars.
Work by the Australia Institute simulated comparative performance of an Australian fossil fuel free investment portfolio with an indexed ASX portfolio and found similar risk return characteristics.
The report, Climate proofing your investments: moving funds out of fossil fuels, found “A screen eliminating companies whose business model is dominated by fossil fuels can readily be conducted, reducing unburnable carbon risk without compromising returns”.
Mr Sheikh said: “For the first time, Future Super provides Australians with the opportunity to take one of the most powerful actions in fighting climate change, by ensuring their super is not contributing to the problem and instead forms part of the solution.”
A political birth
Mr Sheikh said the idea was generated from the growing number of Australians “increasingly frustrated by our government’s inaction on climate change” and keen to use their savings “to work as part of the solution rather than contributing to the problem”.
“With the Great Barrier Reef and other precious places facing unprecedented threats from fossil fuel projects, there has never been a more important time to take action together,” Mr Sheikh said.
“Together we have the power to disrupt business as usual – to send a message to the big end of town that they must take climate risks seriously when they’re managing our money.”
He said this was a part of a global trend as major economies moved toward action on climate change and fossil fuels were increasingly being seen as a risky investment class.
Financial analysts have warned of substantial risk to investors holding shares in fossil fuel exposed companies and HSBC has warned companies such as BP and Shell that they could lose 60 per cent of their value if the international community delivers on its agreed emissions reduction targets, Mr Sheikh said.
“Heads of the IMF, OECD and World Bank have all highlighted the significant risk of large levels of global stranded assets.”