The $40 billion UniSuper investment fund has announced that it will exclude fossil fuel companies from its “socially responsible” investment options as part of a refocus of its portfolio.
UniSuper says the move is part of a strategy to also exclude gaming and weapons stocks from its socially responsible portfolio. Tobacco was excluded from all its investment options in 2012.
The move came as funds run by universities themselves came under pressure to account for their carbon intensive investments in their portfolios, although UniSuper says it was not a direct response to that lobbying, but takes it beyond what is required of, say, the Dow Jones Sustainable Index.
UniSuper is one of a number of industry funds targeted by 350.Org and other “divestment” campaigners to exclude fossil fuels from their investment portfolios.
The decision made by UniSuper means that fossil fuel investments are only excluded from the socially responsible options, which has around $1.5 billion under management, and not from its diversified portfolio. And not all fossil fuel investments will be excluded.
“With regard to the fossil fuel sector, we understand that there are many views about where the threshold for exclusion should be set, for instance, should utilities companies be excluded?” UniSuper chief investment officer John Pearce writes in a letter to investors.
“At this point, we’re proposing to screen companies involved in fossil fuel exploration and production. In the future, we may review whether it’s more appropriate to also exclude utilities and other fossil fuel related companies.”
Pearce says this and other changes will be implemented “over the course of 2014” unless there is significant opposition to the changes.
The announcement came as Australian university investment funds are under pressure to fully account for their investment decisions after an apparent attempt to sidestep scrutiny about their carbon intensive developments.
The Asset Owners Disclosure Project (AODP) has revealed that Victoria’s Monash University sought to evade a request by the AEDP to take part in a survey of investment pattens and carbon exposure.
According to an email mistakingly sent to the AEDP by Monash investment officer David Pitt (instead of his chairman), the email suggested the university fund would not
“My recommendation is we let this through to the keeper… To pursue this would involve or imply ‘unbundling’ of our investment activities … and we might not score well anyway,” the email said according to the ABC Lateline program.
“Better not to respond so this group would have to rely on public information and we would simply be in a position to say that we are unaware of their scoring and did not participate.”
The email has outraged the AODP and those seeking to hold large institutions, and investment funds, accountable for their carbon exposure. It says this is part of a broader collusion among Australia’s Group of Eight (Go8) universities to avoid scrutiny over their long term investment strategies.
AODP Chair Dr John Hewson, an economist and former Coalition leader, and also a Professor at ANU said in a statement.
“This is the tip of the iceberg regarding institutional resistance to the transparency that would prove that these Universities and other institutions are taking some huge gambles on a nice gentle transition to the low carbon economy – and they have no Plan B if they are wrong.
“These Vice Chancellors and their investment officers are trusted with this money that doesn’t belong to them – they have a duty to avert the risks to that money posed by climate change.
“Universities are multi stakeholder societal bodies that are supposed to be leading the thinking on how to manage this difficult low carbon transition. They have staff, students, alumni all working to assist the transition whilst their own University refusing to acknoweldge the investment risks to the universities endowment – it’s extraordinary.
“A series of serious questions now have to be answered on what degree of similar collusion is preventing transparency amongst other institutions such as superannuation funds? Have they all decided to keep quiet about the gambles they are taking with the money entrusted to them to manage carefully?”
“The refusal of many funds to even disclose to their own members shows the sheer scale of institutional resistance. Just how long can they hope to defend the indefensible?
“We have suspected for some time that these Universities and other institutions are putting long term stakeholder capital at risk by relying on short term markets – how quickly they seem to have forgotten the sub prime chaos.
“The Universities now have a choice – to battle all of their stakeholders who are not going to back down, or come clean and disclose their current position whilst committing to moving towards a more sustainable investment path for their Universities endowments.”