2 October 2012 —A new social media online platform, The Vital Few, could open the floodgates of financial power to tackle climate change by allowing pension and superannuation fund members to redirect some of the $60 trillion they ultimately own into sustainable ventures.
The platform, founded and co-partnered by the Climate Institute, and supported by the head of the global trade union movement Sharan Burrow, former Liberal Party leader John Hewson and other key civil society groups, is aimed at unlocking a resource that could have a vast impact on securing a better future for its beneficiaries.
Climate Institute chief executive officer John Connor calls it a “democratisation” of global capital.
“The largest pool of available investment capital is the around $60 trillion supposedly managed for the long term by the world’s retirement, insurance and sovereign wealth funds, yet Deutsche Bank estimates less than 2 per cent is invested in low-carbon assets,” Mr Connor said.
“Shifting even a small percentage of these funds can make a significant impact in tackling climate change and, as proper long term risk management, requires no legislative change but such a shift would enhance globally emerging laws and policies that price and limit carbon pollution and encourage investment in clean energy.”
Asset Owner Disclosure Project executive director Julian Poulter said the pension industry had continued “its fast and furious spending spree on high-carbon, high-risk investments with little accountability for their impact” on the long-term financial security of both individuals and the broader economy.
“The Vital Few platform can be used by anybody signing up as a free member to exercise their legal rights in forcing their funds to demonstrate how they are performing their fiduciary duty in managing big systemic risks such as climate change,” he said.
The platform was built by AODP, an investment industry non-government organisation currently conducting the world’s first independent survey of 1000 pension, superannuation and sovereign wealth funds.
Pilot surveys in Australia and industry led surveys have shown there is no disclosure of portfolio emission contents, inadequate management of climate risks and a massive imbalance between high and low carbon investments.
International Trade Union Coalition general secretary Sharan Burrow said through mandatory retirement fund contributions and other savings, millions of workers had become accidental investors and participants in short term and unsustainable investment decisions with global impact.
“This vital tool is part of a profound change in the operation of global capital,” she said.
“The ownership of the assets that shape our economies is no longer in the hands of the wealthy of big governments but in the pension accounts of ordinary citizens.
“These citizen investors can now collaborate to help make the kind of sustainable economy we need for a more prosperous future.”
AODP chair John Hewson said asset owners, like the pension and super funds (owners), appear to have learnt nothing from the mismanagement of sub-prime mortgages which triggered the global financial crisis.
“The Vital Few is an online community where even a few pension members can lead real change,” he said.
“The pension industry is failing its members, and it may only take a vital few to steer it back on course.”
Harvard Law School Program on Corporate Governance senior fellow Stephen Davis said the bedrock principle behind capitalism was that it works when owners look after their property.
“Today, citizens saving for the long term are the ultimate providers of capital and therefore the fuel for economic growth, innovation and jobs. But much of the time their capital and
ownership is outsourced to big institutional intermediaries such as mutual and pension funds.
“Some of these are acting in the citizens’ interests. But too many focus their investments on the short term, sending signals to corporate boards to act irresponsibly on issues such as executive pay, climate risk and board composition.
“The Vital Few initiative, by starting with the issue of climate risk, is a milestone in helping restore genuine ownership to capitalism.”
- See The Vital Few website at www.AreYouTheVitalFew.org