Nicholas Gurieff

7 April 2014 — The University of New South Wales is a world leader in sustainability research, so why won’t it, along with other leading Australian universities, acknowledge its contribution in providing financial support to the industries fuelling climate change, asks Nicholas Gurieff.

Marks are out and Australia’s top universities have been given a clear “fail” for their inability to put their money where their mouths are.

Last week, it was suggested in a piece on ABC’s Lateline that Australia’s Group of Eight Universities, which includes the University of NSW, have been colluding to avoid scrutiny over the financial risks of their fossil fuel investments.

They have taken this stance despite growing pressure from student leaders and financial experts like former Liberal party leader John Hewson.

Why should Australia’s universities pay any attention to these risks? It is estimated that Australian universities own close to AUD$6 billion in endowments provided by benefactors, held typically in shares or managed investment portfolios. Following the Global Financial Crisis many of the world’s largest universities suffered big time due to their reliance on returns from their investment portfolios, and in 2014 a new financial crisis is brewing.

According to the Carbon Tracker Initiative, two-thirds of the fossil fuel reserves on company balance sheets must stay in the ground if the world is to avoid warming in excess of the internationally agreed two-degree ceiling. This will mean that coal mines, gas wells and related infrastructure will need to be written down or “stranded”, hitting investors with major financial losses.

It is this burgeoning “sub-clime crisis” that John Hewson’s Asset Owners Disclosure Project is taking the world’s universities to task over. Last month, the AODP issued surveys to 300 universities globally, asking them how they were managing the financial risks their fossil fuel investments pose.

UNSW in particular has made its position on this issue clear. Responding to calls from staff and student representatives to screen its investments, UNSW has chosen to use external fund management as an opportunity to put its head in the sand and ignore the changing financial landscape.

UNSW is applying the concept of “somebody else’s problem” to great effect – washing their hands of any responsibility with rhetoric and semantic arguments that ignore the impact of their decisions. UNSW may not directly hold any shares in the world’s largest fossil fuel producers – companies whose business plans will see the climate surge above two degrees – but they choose which managed funds they invest in and will suffer the same as others when the bubble bursts.

But why has it fallen to students to point this out? Why aren’t our universities’ own financial decision-makers seeing the writing on the wall. After all, the looming financial risks that await university investments as the impacts of climate change permeate the world’s financial markets are now drawing the attention of analysts at such esteemed financial institutions as Citi, Deutsche Bank, Goldman Sachs, Bernstein, the World Bank and BlackRock.

Equally, why, when one of Australia’s most astute financial minds politely asks UNSW to disclose how it is managing these risks, does the university recoil? If UNSW won’t act to remove its exposure to these risks then surely it is capable of completing a survey on how it will manage them.

The ironies that abound in their approach would be amusing in another context, but in this case are tantamount to a new form of climate denialism – a rejection that climate change’s risks extend beyond the environmental and social, and have the potential to radically undermine both the global economy and the university’s own investments.

UNSW’s academic staff and students are world leaders in teaching and research on climate science and renewable energy, so why won’t the university acknowledge its own contribution in providing financial support to the industries fuelling climate change?

It’s time for UNSW to face the fact that addressing climate change can no longer be limited to its teaching and research. If UNSW is to retain its reputation as a world class institution for educating the leaders of tomorrow then it’s time to put its money where its mouth is – to divest from the industries that are driving dangerous climate change. But first, it must pass the first test and disclose its exposure to and management of its investments in these companies.

Come on UNSW – it’s time to wake up and do your homework on fossil fuel investments.

Nicholas Gurieff is the environment officer on the Student Representative Council at UNSW. He is a final year mechanical engineering and arts student.