Mining morality or vilifying coal?
Churches, universities, superannuation funds – they’re beginning to divest from fossil fuels. And the mining industry doesn’t like it.
IN mid-July, the peak body of the Uniting Church in Australia voted to sell its investments in fossil fuels. The decision was available online for anyone who cared to peruse its minutes, but the church didn’t get around to issuing a media release until a month and a half later, on the last Friday afternoon in August.
“We didn’t think it was the most earth-shattering news, because it’s a pretty mainstream issue in the Uniting Church now,” explains the church’s president, Reverend Professor Andrew Dutney. Yet its resolution included a moral claim that may be confronting for most Australians, who, by way of their superannuation funds – at the very least – own a stake in coal, oil or gas projects.
“Further investment in the extraction of fossil fuels contributes to, and makes it more difficult to address climate change,” the church states. Given the harm climate change will cause, “further investment and extraction is unethical”. “A number of people have found that to be a strong statement,” Dutney says. “But it’s very hard to argue against.”
Australians have two key facts to consider, he says: we’re among the world’s highest emitters of carbon dioxide, per person; and on top of that, we have enormous reserves of coal set to be exported for electricity generation.
“If we were to extract and burn all those reserves, then global warming will be much more disastrous for the poorer nations who are our neighbours.”
Since its belated media release, the church has been overwhelmed by the public response. News of its decision had “all but gone viral” on social media, Dutney says. “The reaction has been remarkable – I can’t remember a statement of ours having this kind of impact. It has made us realise that there are a lot of people who think this really is a big deal.”
The church’s decision is the latest move in the dizzying campaign for divestment from fossil fuels, which began in United States in late 2012, spurred by the writer and environmentalist Bill McKibben and his activist group 350.org.
McKibben toured Australia in mid-2013 and since then, advocates for divestment have emerged wherever institutions and individuals are investing their money. There are dozens of campaigns targeting universities, churches, councils, superannuation funds and banks.
In Australia, there are divestment campaigns at 19 universities, including the University of Melbourne, Monash, Latrobe and RMIT, calling for the institutions to sell whatever investments they have in fossil fuel companies.
Off campus, nearly 1000 residents in Melbourne’s inner north have petitioned Moreland City Council to go fossil free. And following a campaign headed by 350.org, UniSuper has just launched its revamped “sustainable investment” fund. It now screens out all fossil fuel companies, including the utilities Origin and AGL. On Friday, HESTA, the health industry superannuation fund, announced that it would restrict its investments in coal for electricity across its entire portfolio. It is the first Australian super fund to do so.
Thea Omerod, chair of the Australian Religious Response to Climate Change, says “a whole swag” of church organisations have pledged to divest, or are considering it: “They’ll be coming thick and fast.”
In July, the World Council of Churches, an umbrella group representing over half a billion Christians, announced its plans to fully divest from fossil fuels. The same month, the Anglican Church of Australia passed a motion encouraging its diocese to divest. A global campaign for the Vatican to divest has just been launched.
Father Brian Lucas, general secretary of the Australian Catholic Bishops’ Conference, says divestment is “actively being researched and considered” by the Catholic Church, but it will be hard to reach a clear resolution. “It’s too simplistic to say you can’t invest in coal mining companies – there are other factors to do with how emissions are mitigated,” he says.
The proliferating calls for divestment have also prompted an increasingly vocal counter-campaign – extolling the virtues of coal in particular – led by the mining industry and championed by Prime Minister Tony Abbott.
At a mining industry dinner at Parliament House in May, the Prime Minister said his job in government “is to keep mining strong” and that it is “particularly important that we do not demonise the coal industry”. He said the fundamental problem with the carbon tax was that it promoted the idea that coal should be left in the ground. “Well really and truly, I can think of few things more damaging to our future,” he said. The Prime Minister did not mention climate change.
Charlotte Wood, the campaigns director for 350.org in Australia, says the divestment movement is growing precisely because of that kind of attitude.
“We’ve tried for many years to get ambitious political action on climate change, but until we address the influence of the fossil fuel industry on our political decision makers we’re not going to see the change we need in the time we’ve got left,” she says.
“Divestment is about trying to unlock the deadlock that shackles our leaders to the fossil fuel industry. And it’s about speaking to the industry in the only language they understand, which is money. It really does have the power to erode the industry’s social license to profit from wrecking the planet.”
Researchers from Oxford University released an analysis of the campaign last October. They concluded that divestment would have little direct effect on companies and their share prices, although some coal businesses were vulnerable.
The report, funded by World Wildlife Fund UK, said the movement’s real power lies in its ability to stigmatise the industry. “In almost every divestment campaign we reviewed, from Darfur to adult services, from tobacco to South Africa, divestment campaigns were successful in lobbying for restrictive legislation affecting stigmatised firms.”
It identified three stages of divestment, beginning with churches or bodies such as public health associations – who are motivated by ethical priorities – then moving to universities and councils or cities, and finally, investors such as banks and pension funds. The fossil fuels divestment campaign had moved rapidly to the second stage, the report said.
Nearly 30 cities have now pledged to divest, including San Francisco and Portland in the United States and Dunedin in New Zealand, as well as 13 universities and colleges in the United States. In May, Stanford University, in California, committed to divest from companies that mine coal for energy generation. Its endowment fund is worth about US$19 billion (AUD$21 billion).
A fortnight ago, the University of Sydney announced it would suspend further investment in coal companies while it reviews its ethical investment policy. It is also assessing what to do with its existing $900,000 holding in Whitehaven Coal Limited, owner of the controversial Maules Creek mine in NSW. The decision followed a brief, intense email campaign orchestrated by Greenpeace, adding to a longer-standing push by students.
The same week, students at the Australian National University held their annual elections. This year they voted on an extra question, about divestment. Over 80 per cent said the university should stop investing in fossil fuels. The university has refused to comment.
Students at University of Melbourne and University of Sydney are holding similar votes this week.
The campaigns for the third wave of divestment – superannuation funds and banks – are also thriving.
One of the key advocates is Market Forces, which is affiliated with Friends of the Earth. The group has been digging into the finance behind fossil fuel projects for the last 18 months. Its founder, Julien Vincent, argues that as well as the environmental imperative not to invest, there’s also a financial case, especially for long-term investors such as banks and superannuation funds.
That argument is based on the idea of the “carbon budget”: there are already far more proven reserves of fossil fuels than can be burnt if we’re to avoid runaway climate change. As the world moves to limit carbon emissions, some of those reserves will become “stranded assets” and lose their value.
Market Forces has just launched a website called Super Switch, which helps people compare various funds’ investments in fossil fuels, based on publicly available information.
It is also one of more than a dozen groups pushing Australian banks to rule out funding the recently approved Carmichael mine in the Galilee Basin and the expansion of the Abbot Point port on the Great Barrier Reef. The project is owned by the Indian multinational, Adani Group.
The activists are encouraging people to “put their banks on notice” before a public “divestment day” in mid-October.
“The big four banks play a critical role in financing fossil fuel projects,” Vincent says. “If you want to get a major new coal mine, coal port, or gas export plant up, you need money from the big four.
“But this movement is going to keep getting bigger and bigger until the banks do what we want.”
Unsurprisingly, the banks have gone to ground – all four major banks declined to be interviewed for this article, as did Adani Australia.
Meanwhile, the environmental groups have celebrated the commitments of several international banks – including Deutsche Bank, the Royal Bank of Scotland and HSBC – not to invest in the expansion of the port at Abbot Point.
But the reality is less clear-cut. Deutsche Bank, for example, hasn’t ruled it out. It has only said it won’t invest while there’s disagreement between UNESCO and the federal government about the risks to the reef. That situation may change.
Likewise, Bendigo Bank has been praised for stating it won’t invest in coal and gas projects, but its position is more coincidence than commitment: it is a small bank and those are very large projects. Neither Deutsche Bank nor Bendigo Bank was willing to be interviewed either. Fossil fuels remain a touchy subject.
Perhaps that’s because the mining industry is biting back. Soon after the University of Sydney announced its pause on coal investments, Whitehaven Coal boss Paul Flynn accused campaigners of “green imperialism”. He said the industry needed to spend more time and money countering the divestment movement.
Asked what he thinks of divestment, Brendan Pearson, CEO of the Minerals Council of Australia, says coal must not be stigmatised. “We want to make sure that an environmental campaign doesn’t get dressed up as investment advice. We can’t let claims about ‘the end of coal’ go unanswered,” he says.
He argues not only that the coal industry is good for the Australian economy, but also contests the notion of the carbon budget, maintaining there’s no limit to fossil fuel extraction. Pearson says more efficient coal power plants, as well as “carbon capture and storage” technology will change the equation.
The industry has also begun to press an ethical claim of its own: new coal projects and exports are necessary to reduce world poverty. “The cheapest electricity is coal,” Pearson says. “If people are in energy poverty, they are absolutely likely to be in poverty, because the correlation between energy access and economic growth is incontrovertible.
“To me it is not just condescending, it is morally bankrupt to say: ‘We have it, but you can’t’.”
Debi Goenka, from the Mumbai-based Conservation Action Trust, lodged a submission with the Queensland environment department opposing Adani’s Carmichael coalmine and rail project. His organisation works with rural communities near several of the company’s coal-fired power plants in India.
Goenka is critical of the industry’s claims about reducing energy poverty. “Even assuming they had physical access to an electricity connection, people living below the poverty line would not be able to pay for the electricity,” he says. About 400 million people in India have no access to the grid.
It’s not an argument that convinces big investors either. Nathan Fabian, from the Investor Group on Climate Change, says the industry’s claims about energy poverty appear “disingenuous”.
“If the industry was serious about eradicating poverty it would understand that runaway climate change will wipe out the development achievements of the last three decades,” he says.
Fabian’s organisation represents over 50 superannuation funds and major investors, which together manage approximately $1 trillion. It helps members understand the impact of climate change on their investments and how best to deal with the risks. He’s got feedback for both the campaigners and the coal barons.
Divestment is a “campaigning concept”, he says, which doesn’t match the complicated reality for investors. “It takes time to identify which energy investments may underperform, which fossil fuel exposures to reduce, and how fast. It’s not as simple as saying ‘Just sell all those stocks today’.”
But he also says that some NGOs are providing more credible information and analysis about the implications of a carbon budget than the miners, who often use “the most ambitious assumptions”.
Earlier this year, the Investor Group videoed a mock board meeting for the fictitious “Perfect Storm Pension Fund”. In it, the trustees debate resolutions for considering climate risks in their investment decisions.
“It simply isn’t the case that campaigners are forcing investors to do things they don’t think are right,” Fabian says. “Investors have been tracking this climate risk issue for years, they know it’s a problem, and they’re working on it.
“But it is moving quickly, so if the NGOs want to continue to be relevant, they will need to improve their sophistication on the issues.”
While some investors are looking hard at the business case, the Uniting Church is hell bent on the ethical dimensions. Its NSW/ACT Synod resists publicising how much money is at stake, insisting that there is “no cost to ethical decision making”.
Reverend Professor Dutney says the Uniting Church’s decision was strongly influenced by the worries of its sister churches in the Pacific. “We’re already seeing the results of climate change across the globe and it affects the poorest people disproportionately badly,” he says.
“For us, the idea was simply to do the right thing, regardless of what anybody thought about it. The idea is to accept our responsibility for future generations.”