According to City of Melbourne councillor Arron Wood, his clean investment motion, which was passed unanimously by council on Monday night, was more nuanced than a typical divestment action.
“I’ve been watching the divestment movement for a considerable amount of time,” Mr Wood said, “and I was reluctant to move a motion that was tokenistic, or was just a political statement.”
The city’s motion, which prohibits direct investment in fossil fuels or fossil-fuel aligned companies, came as the National Tertiary Education Union and Australian Academy of Science made similar commitments, and as the movement itself stirs debate in some sectors.
While the City of Melbourne currently has no fossil fuel investments in its $38 million investment portfolio, its motion has formalised this arrangement into the future.
Mr Wood told The Fifth Estate the motion had other parts he felt made it more robust, including a request to its default superannuation provider, Vision Super, to provide a fossil free investment option. Another part will require respondents to transactional banking services tenders to complete a questionnaire on exposure and support to the fossil fuel sector, which will be taken into account when awarding contracts.
While Mr Wood praised the divestment movement’s achievements, he said he framed the motion to minimise the risk of it being politicised and “getting lost”. The motion, he said, was about putting forward a logical proposition that incorporated all financial aspects of council, and was about “getting the house in order” to achieve its emissions reduction targets.
The city has in excess of $55 million under management by Vision Super, and Mr Wood said he was confident there would be a positive response from the provider, as Melbourne was a powerful customer and there was a precedent in NSW of default super providers having ethical investment options.
While the city’s banking contract was only worth around $450,000, Mr Wood said it still sent a strong signal to the banking sector about the growing importance of climate change.
A bigger consideration is in lending, however. For example, current borrowings for the Queen Victoria Market redevelopment is $70 million, which is currently through ANZ. Next time, with the fossil fuel exposure questionnaire, a different outcome might be reached.
The news was welcomed by divestment campaigners 350.org.
“Melbourne City Council has again proven itself to be a climate leader,” Melbourne member Grace Fitzgerald said. “Council has already committed to being carbon neutral, and now the people of Melbourne can rest assured that Council’s money won’t be invested in projects that drive dangerous climate change.”
NTEU and AAS join bandwagon
Melbourne’s actions have also been met by divestment pledges from the National Tertiary Education Union – the first Australian union to divest from fossil fuels – and the influential Australian Academy of Science, the country’s government-endorsed independent science body.
The NTEU’s 25,000-strong membership is largely made up of university workers and academics, whose places of employment have been at the forefront of the divestment movement.
“The tertiary education sector is a leader when it comes to teaching and research on climate change and sustainability,” NTEU national president Jeannie Rea said. “It makes sense to ensure the union’s investments are not benefitting companies that are contributing to an unsustainable future.”
Writing in The Conversation, AAS president Professor Andrew Holmes said it was the academy’s responsibility to show leadership in areas that were within its expertise.
“As scientists, it’s often not in our nature to be happy in the spotlight. But current and future generations are relying on us not to shirk our responsibilities; we must not leave the duty of leadership to those who seek only power and glory. We must ensure that we have a hand in shaping the future so it is fit for our children, and their children.
“In this vein, I am delighted to announce that the Academy has taken some small steps in this area. This year, the Academy resolved that it would no longer hold investments in environmentally sensitive activities. Accordingly, in the last month the Academy has divested itself of direct links to fossil fuels in its investment portfolio.
“Of course, divestment is a difficult political issue, and the Academy is fiercely apolitical. Despite this, it’s a decision that we can make on rational grounds. Is the value that could be derived from fossil fuel activities sustainable in the long term? Certainly not from the view of the Earth system, and probably not financially either. It is possible to put our support behind activities that are most sustainable, both financially and environmentally, so we have therefore committed to do so.
“This is a small step that the Academy can take, but it is a step towards discharging our responsibility as scientists, and as leaders in society.”
A controversial approach?
Divestment hasn’t been without controversy, however, with some commentators questioning the effectiveness of a movement they see as potentially shifting the ownership of shares to those less interested in climate issues.
Mr Wood said he was aware of the current debate in The Fifth Estate, however he disagreed that divesting would simply see other shareholders “pick up the slack”, pointing to moves made by big public entities as highlighting risk and signalling a definitive long-term shift in investment patterns.
“The risk becomes more apparent at every shift.”
Indeed, earlier this year former EU Climate Commissioner Connie Hedegaard told The Fifth Estate that the divestment movement signalled a shift in business as usual.
“One can argue that at this stage it’s merely symbolic, it’s politics, but investment patterns are changing,” Ms Hedegaard said.