*Update: Since publication of this story, a spokesperson for the Future Fund has emailed the following response to RenewEconomy’s report on the AODP claims:
AODP is simply wrong to claim the Board does not consider climate change.The Future Fund has an environmental, social and governance policy that applies to all environmental issues including climate change. The policy has been explained many times: in Senate Estimates hearings, in our annual reports, in papers on our website and in media briefings.
A freedom of information request submitted by the Asset Owners Disclosure Project (AODP) has revealed that the Future Fund’s board of guardians still has not considered the issue – even once – despite being put under increasing pressure to factor it in.
Indeed, the same outcome was revealed more than four years ago, after an FOI request from the Climate Institute for minutes of all Future Fund meetings where ”climate change” was mentioned turned up no matching documents.
The latest AODP FOI request has also confirmed that the Fund has not once considered reporting its plans for climate risk protection to allow itself to be measured against other funds around the world.
Disappointing, but not entirely surprising, after last month’s declaration by Future Fund chairman and former Howard government Treasurer, Peter Costello, that he had no intention of divesting the fund from fossil fuels, and that coal would form a critical part of Australia’s energy mix for the foreseeable future.
“Unless parliament passes a law so that we are in breach of statute, we’ll continue to invest in companies where there is an investment case, whether they are banks or fossil fuel companies or banks lending to fossil fuel companies,” Costello told the AFR.
But AODP chair John Hewson, an economist and former Liberal Party leader who also served as shadow treasurer to Paul Keating in the late 1980’s, says Costello’s attitude is “ludicrous”, in light of the action being taken elsewhere, including among some of the world’s leading funds.
“It seems a clear breach of fiduciary duty,” Hewson said in a statement on Tuesday. “Costello has proved again that he is willfully blind to the risks of climate change and the momentum of what is going on around the world to fix it.
“In the real world Climate Change is now an economic and financial issue. The bastions and leaders of global finance are now banging the drum to take urgent and early action and all Costello does is to wax lyrical about Australia’s fossil fuel future – that isn’t called swimming against the tide that’s playing Ostrich”
In the past year, the AODP points out, the former head of the US Treasury Hank Paulson has described the great financial risks of climate change, while Governor of the Bank of England and Chairman of the Financial Stability Board Mark Carney went to “extraordinary lengths” to warn the finance industry of the huge contagion risk from climate change.
The speech by Carney warning against the risks of climate change now joins a host of conservative institutions urging action, including the US Defence Department, NASA, The Vatican, OECD, G20, WEF and many others, the AODP says.
“In 2008, Australia escaped the worst financial crisis in a century by virtue of China’s boom,” Hewson said.
“Every other major economy has suffered nearly a decade of consequences from that crisis. Now we have a potentially worse crisis looming and Australia has no Chinese parachute this time.”
“Australia’s future fund must be governed by guardians who can see and help make the future which will inevitably be one built around clean energy and renewables – there are millions of people working on this transition already and a few vested interests such as Costello allowing their ideology to cloud their judgement.”
“Look at the list of institutions and people calling for an urgent low carbon transition – not exactly left wing hippies are they?” said Hewson.