Climate activist groups Go Eco and 350 Aotearoa have called on Waikato Regional Council to adopt a socially and environmentally responsible investment policy. The groups want the council to freeze all new investments in fossil fuel companies and divest all current holdings in such companies by 31 December 2022.
The groups made a presentation to the Council’s Finance and Services Committee.
The Council will review its investment policy in the next few months. Chair of the Committee Barry Quale was of the view that an exclusion of fossil fuel investments was likely.
Sustainable investment is a core pathway identified in the Waikato Regional Council Climate Action Roadmap.
The Sustainable Investment pathway lays out a clear moral and business case for Waikato Regional Council to divest from coal, oil, and gas companies. This includes an outline of the ways climate change can affect financial stability.
The Regional Council fund has over $100 million invested, but currently has no responsible investment policy to exclude investments in harmful industries such as fossil fuels, tobacco, gambling and firearms.
Responsible investment is increasingly common practice across the finance sector, and there is growing evidence that responsibly invested funds typically outperform their equivalent mainstream counterparts. In New Zealand, assets managed in accordance with responsible investment principles now represent 52% – or $153.5 billion – of New Zealand’s total NZ$296.3 billion.
Common criteria used in negative screening include gambling, tobacco, fossil fuels, weapons, alochol, pornography and animal testing.
Internationally, the finance sector is responding to citizens pushing for fossil fuel divestment. Over 1245 institutions, worth USD $14.48 trillion, have now committed to policies black-listing coal, oil and gas companies. Over 100 cities and regional councils have divested their public funds from fossil fuels, including Auckland City Council, Dunedin City Council and Christchurch City Council in Aotearoa.
Fossil fuel stocks are increasingly underperforming and create financial risks for institutions and fund managers that have not excluded the industry from their investment portfolios. The fossil fuel sector provides a dramatic example of a failure to price ESG risk. Over five years, while the S&P 500 Index rose by 48%, the S&P Oil & Gas Index fell by 63% and the Coal Index by 84%