Divesting Investments on Social, Environmental and Ethical Grounds

The Australia Institute is a progressive think tank that produces credible, fact based economic reports on the issues facing Australia.  What I have copied here is a short article from their periodic email on recent decisions by the ANU and others to divest the shares they held of companies whose business and/or behaviour is unacceptable on social, environmental etc. grounds.

It is just part of the pressure being encouraged by organizations such as 350.org to encourage banks, super funds etc. to stop investing in and financing unethical activities such as extracting fossil fuels:

Divestment movement hits a nerve

The fossil fuel divestment movement seemed to hit a particularly sensitive nerve this week. The Australian Financial Review has published a litany of critical front page stories, editorial and opinion pieces. In particular, special outrage flowed over divestment decisions taken by the Australian National University (ANU).

ANU announced last week it would divest from seven resources companies on environmental, social and governance (ESG) grounds. ANU is home to a long running student campaign calling on them to divest from fossil fuels. Under pressure, ANU sought professional ESG research and declared it would knock out the companies that ranked worst. The companies impacted include gas giant Santos, Oil Search and other miners extracting copper, nickel and a range of other minerals.

ANU’s decision has drawn ire, not only from the companies themselves, but also from SA Premier Jay Weatherall, previous Resources and Energy Minister Gary Gray and some Indigenous groups. There have been all manner of complaints: the companies say they weren’t consulted; they have won ESG awards; Santos is a proud Australian “pioneer”; fossil fuels cure poverty “whatever the effects of carbon dioxide ­emissions on climate”; mining is essential to modern life, and so on. One company is talking about legal action.

Others have baulked at the unusual enthusiasm in the reactions and coverage. A Canberra Times editorial said it “verged on hysterical”. Clean energy commentator Giles Parkinson, himself an ex-AFR deputy editor, said the reaction was “as though someone had committed treason against Team Australia. Or at the very least against Team Coal.”

At first glance, coal has nothing to do with it. ANU is not divesting from coal companies – unlike Stanford, which is divesting from all big coal companies, and Glasgow University which this week said it would divest from fossil fuels. Indeed, without a sector wide screen, ANU is likely to reinvest in fossil fuels. But when ABC’s Lateline covered ANU’s decision this week, theMinerals Council sent the head of their Coal Division into bat for the miners. Maybe that’s because coal is most at risk from the reputational effects of divestment campaigns. Coal is the heaviest emitter, cheapest to substitute with renewables and at most risk of being displaced by new clean energy.

ANU Vice Chancellor Prof. Ian Young defended the ANU’s move:

as “a major researcher in environment and alternative energy, we need to be able to put our hand on our heart when we talk to our students and to our alumni and to our researchers and be able to say that we’re confident that the sort of companies that we’re investing in are consistent with the broad themes that drive this university.

ANU economist Warrick McKibbIn did not agree, saying “you need proper, clear, transparent policies such as carbon pricing… You don’t get the sort of adjustment we need by these token gestures by institutions like a university.”

But Swiss investment bank UBS endorsed the strategy in a recent investor note. UBS said this was a “potentially effective campaign”, noting that:

“many of those engaged in the debate are the consumers, voters and leaders of the next several decades. In our view, this single fact carries more weight than any other data point on the planet for this issue: time, youthful energy and stamina are on the side of the fossil fuel divestment campaign.”

4 thoughts on “Divesting Investments on Social, Environmental and Ethical Grounds”

  1. John
    From what I gather ANUs investments in mining where only about %1 of their portfolio anyway, so it’s a token gesture as McKibbin states.

    If they were serious they’d refuse funding that came from mining via the tax system ( company tax, payroll tax, royalties, income tax from the 1000s that earn in the mining sector….etc )

    But they won’t of course, it’s somehow cleansed when it becomes ” general revenue “

  2. American students, I think, are keen on the divestment movement. I think it’s largely symbolic, problematic, but perhaps a way of making a statement while not challenging capitalism fundamentally.

    If you want to invest ethically you’d probably rule out sandmining. But then you should also eschew white paint. And probably forgo buying cotton T-shirts because the cotton industry is ethically problematic.

  3. For ANU it may be largely symbolic but it avoids any suggestion that what it does with respect to teaching and research is not compromised by the shares it owns.
    The hysterical reaction of the Mining Council suggests that they think divestment by high profile institutions really is having an effect. If nothing else it adds to the general anti fossil company pressure.
    The more important thing is the campaign to discourage banks from loaning money to fossil projects. It has been having an effect. Banks don’t need to put up with the PR problems associated with lending to fossil projects. They have plenty of less problematic customers to lend to. In addition, the constant muttering about coal becoming high risk simply makes them look like mugs with the sort of short term vision you associate with the Qld government’s coal industry policies. Another reason for the mining council to get hysterical.

  4. To my surprise Christopher Pyne has declared the ANU decision bizare and regrets that he hasn’t the power to overrule the decision.

    Federal Education Minister Christopher Pyne has labelled the Australian National University’s (ANU) decision to sell off its shares in seven mining companies as “bizarre”.

    Earlier this month ANU announced a plan to divest itself of shares in companies like Santos and Iluka Resources after receiving independent advice on social responsibility.

    Mr Pyne told the ABC’s AM program this morning he lamented the fact he had no power to intervene in the university’s decision.

    “Sadly, no, the universities govern themselves. But I think to suggest that companies like Santos and Iluka, which are both excellent companies, are somehow not ethical investments is a bizarre decision,” he said.

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