You know that ‘do what I say, not what I do’ just doesn’t 
inspire confidence in the speaker’s leadership.
That’s because we know that actions speak louder than words.
So I was very pleased when my main superannuation fund
finally told me about several activities that it has been taking to proactively manage the climate change risks of its superannuation portfolios.
I especially like the way my fund had advocated for regulation to limit atmospheric levels of greenhouse gasses. This retirement fund is a ‘good guy’, after all. 🙂
But is it?
My fund proudly told me about some of some of the things that it had been doing
- sending submissions ‘advocating for appropriate [government] policy responses’ to collectively address climate change…which has resulted in better reporting and analysis of climate change-related risks and performance for investments, to enable wider investor scrutiny of climate change risks :
- constructing members’ portfolios to ensure that they are constructed with due attention to risks and opportunities posed by climate change (as well as other factors) :
- participating in relevant surveys and groups such as Global Investor Survey on Climate Change, the Investor Group on Climate Change, Institutional Group on Climate Change, the Investor Network on Climate Risk, and using indexes such as MSCI’s ESG Intangible Value Assessment
It was so confident about how it had integrated sustainability factors into its investment decision-making across all its portfolios that it had discontinued its sustainable investment option.
But, as Ceres (a non-profit organization advocating for sustainability leadership) notes, the results of the latest Global Investor Survey on Climate Change show that:
while members of the investor networks surveyed continue to show a strong commitment to addressing climate change in their investment activities, translating that commitment into investment decisions that reduce climate risks to portfolios and leverage climate-related investment opportunities remains a challenge. Leading investors continue to advance their climate-related investment practices, and are prepared to do significantly more with the appropriate policy signals.
In other words, this superannuation fund of mine, like so many others, appears to have its heart in the right place and make the right noises…but isn’t translating that into clear investment decisions – particularly ones that are going to reduce climate change and its associated risks.
So…I wrote off to them to congratulate them on what they had done and to ask more questions…to seek further clarification about what exactly they mean and are doing.
My questions were about things like:
- What are all the fund’s objectives?
- What does the fund mean by giving ‘due consideration to climate change risks and its implications’? (Words like this are used by many companies and organisations.)
- What processes are in place to regularly review the fund’s portfolio for climate change risks?
- Has the fund considered joining with other investors to use its investment power to change large-scale industrial activity? (The action of institutional investors to divest from companies doing business in South Africa was one of the reasons apartheid ended. Similarly, instutional investors could use their power to, for example, keep fossil fuels in the ground and help a switch to renewable energy.)
- Has the fund considered engaging with companies in which it is invested in order to effect behavioural change in those companies? If so, how?
- What, if any, investments does the fund hold in businesses, operations or projects focussed on fossil fuels such as coal, oil and gas – and why? (It may be easier to tell you what the investments were as at the end of the most recent financial year.)
Questions like these help fund managers know that members like me are interested in what my money is being used for – and that I want to ensure that it is used in ways that keep fossil fuels in the ground…and do not contribute environmental destruction such as the climate change emergency.
This last question – asking specifically what investments the fund holds – is very important…and even more so if the fund has said it is committed to reducing the risks that it faces from climate change.
Often, investors – particularly institutional investors – focus on short-term returns. They say that they rely on the good returns that companies involved in coal, oil and gas operations deliver.
But those returns are only as high as they are because they do not include payment for environmental, health and social damage – particularly to the atmosphere.
Contrary to what such investors think, investments that are truly sustainable – in every sense of the word – can be very lucrative and can outperform traditional investments.
So, how can destruction of the climate that enables our world as we have known it throughout human civilisation ever justify short term monetary gain?
The simple fact is, it can’t.
It is the current climate that allows us to have our civilisation, including our economy and standard of living: if the climate changes, so does human civilisation – and that will make economic challenges like the ‘Global Financial Crisis’ look miniscule.
If we do not change the way we live, our economic security systems such as banks and retirement funds will no longer be there.
And that’s why it’s so important to engage with superannuation and retirement funds, banks, companies, investment managers and so on…to ensure that they change their attitudes and behaviours…to leave fossil fuels in the ground – so that we can continue to have a habitable Earth.
Have you heard about how your superannuation or retirement fund is managing its climate change risks?
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