Investing is about picking the future.
Look into the future, say 20 years from now, what do you see?
Do we still fill up at the petrol pump?
Or do we fill up at the power point?
Does power come from fossil fuels?
Or is it from the sun, wind and other renewables?
If you believe the future is this...
then why are you investing in this?
Isn't that a bit risky, investing in the past?
The evidence for Responsible Investment being the smart way to invest is on the table.
Let’s firstly have a look purely at returns.
The RIAA Benchmark Report 2017 found once again that the myth of underperformance of responsible investments is unfounded:
- Core responsible investment Australian equities funds outperformed the average large-cap Australian share funds across three, five and 10 year horizons
- Core responsible investment international share funds outperformed large-cap international share funds over three and 10 year time horizons
- Core responsible multi-sector growth funds (balanced funds) outperformed their equivalent mainstream multi-sector growth funds over three, five and 10 year time horizons
These results are good news for investors seeking to have a strong positive impact and strong financial returns.
Fossil fuel divestment
Secondly, let’s look at the accelerating trend in fossil fuel divestment.
The most symbolic divestment to date was announced in September 2014 when the heirs to the Rockefeller oil fortune, withdrew fossil fuel investments in the $860m Rockefeller Brothers Fund.
"We are quite convinced that if he [John D Rockefeller] were alive today, as an astute businessman looking out to the future, he would be moving out of fossil fuels and investing in clean, renewable energy," said president Stephen Heintz.
View this short (3:12) video produced for Global Divestment Day in 2015.
451+ institutions have made divestment commitments globally.
Amongst these, the following New Zealand institutions have made divestment commitments:
- Anglican Diocese of Auckland, Dunedin, Waiapu, Waikato and Taranaki, and Wellington
- City of Christchurch
- Presbyterian Church of New Zealand
- University of Otago Foundation Trust
- Victoria University of Wellington
- Anglican Church of Aotearoa
See other notable international divestment commitments here.
Reasons for fossil fuel divestment
There are two major reasons for these institutions divesting from fossil fuels.
The first is a moral one that says that continuing to invest in fossil fuel worsens climate change which harms people and the environment.
The second is a financial one that says if the world moves to reduce its reliance on fossil fuels and prevent the worst impacts of climate change, fossil fuel assets could be “stranded”, and their owners could lose significant value.
On 29 September 2015, Bank of England Governor Mark Carney said investors need to wake up to the potential for huge losses from a sudden shift in regulations designed to curb global warming and the use of fossil fuels.
Be smart, invest in the future, not the past … and by doing well, do good!