So First State Super has joined the divestment party, albeit turning up with warm VB rather than the ice cold microbrew we were hoping for. On Wednesday evening, the fund advised its members that it would be divesting from fossil fuels in its Socially Responsible Investment option. Dumping fossil fuels from an optional choice is akin to scuba diving in a pool – a good training exercise, but not quite the real thing. To some, it’s a good start. After the media bollocking that the City of Newcastle received for their own divestment announcement, and ANU before them, it is little wonder that industry super funds are wary of leading on this issue.
So how does First State’s divestment compare to their peers? They will divest from companies earning more than 20% of their operating revenue from coil, oil and gas. This threshold of 20% is substantially better than that set by Local Government Super last year at one third, but not as definitive as HESTA’s benchmark of 15%. However, HESTA’s screen is limited to thermal coal investments, whereas First State had the good grace to divest from all three of the nasties. Like LG Super, First State will dump existing holdings, which HESTA did from their Eco pool only, choosing to hold onto to existing brown stuff in their main fund.
First State’s move may only affect $200m of their $52b under management, but potentially up to $500m if their International SRI is included. At our best guess, this would mean dumping around $9m worth of Aussie Energy shares, depending how over or underweight the fund is to the sector. We’re also keen to know whether the Utilities (e.g. AGL Energy, APA Group) and Transport (e.g. Asciano, Qube Holdings) companies will be divested. But as they don’t disclose their entire portfolio, it may take a tenacious member to find out on our behalf.
Given that the fund was pressured by Doctors for the Environment Australia (among others), due to the devastating impacts of climate change, coal dust and CSG, the fund is essentially saying to its members “you can choose to be healthy”, which by its existence suggests that the fund is also offering a range of unhealthy options, which is an interesting marketing challenge given a substantial part of its member base works in health.
But let’s not dwell too much on how far there still is to go with First State. Plenty of time for that. This is an important first step, and another confirmation that people power exists in finance. Members of funds and the broader community can create positive change in this industry. So hats off to everyone who has pressured First State Super over the last few years through our campaigns and via our Super Switch project, and big congratulations to all those at DEA, the Climate and Health Alliance, Healthy Futures and 350.org for all the hard work it took to get here.
If you would like to urge First State Super to divest from the rest of their portfolio or at the very least disclose what they are holding, visit SuperSwitch to keep the campaign rolling along.
— Market Forces (@market_forces) September 13, 2015