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The myth of ‘fossil fuel free’ investment

The myth of ‘fossil fuel free’ investment

Tim Stewart
— 1 minute read

Simply divesting from fossil fuels “doesn’t achieve anything”, and funds that claim to be “fossil fuel free” are being a little disingenuous, says Vision Super.

Vision Super's second annual Corporate Responsibility Report, released yesterday, has laid out the industry fund's approach to sustainability while dismissing the idea of divesting from fossil fuels.

Vision Super, which launched a low-carbon investment option in August 2016, was recently found to be the super industry's fourth largest investor in responsible core investments by the Responsible Investment Association of Australasia, with $1.5 billion worth of responsible assets under management.

According to Vision Super chief executive Stephen Rowe, the super fund has increased its focus on environmental, social and governance (ESG) factors in the past year.

"The carbon intensity of our portfolio has again been reduced, with our overall carbon intensity now around 26 per cent less than that of the index. Our sustainable balanced option ... is lower carbon still," Mr Rowe said.

The fund is a "proud signatory" of the Paris Pledge to limit global temperature rise to less than 2 degrees, according to the report.

But Vision Super still owns companies that produce fossil fuels, and dismissed the idea of divestment out of hand.

"Divesting from companies that produce fossil fuels doesn’t achieve anything," the report said.

"We could sell everything we hold that has even a remote connection with energy production tomorrow, and it wouldn’t result in a single gram of carbon less being emitted the day after."

There are plenty of funds that market themselves as being 'fossil fuel free', said Vision Super – but that claim falls down upon closer inspection.

"The truth is, fossil fuels are so integrated into our economy that you can’t realistically invest in anything that doesn’t use fossil fuels," the report said.

"Even if you’re investing in solar technology, producing those panels in the first place takes electricity from fossil fuels. There’s no escaping it. Everything that uses electricity, everything that needs transporting – dig deeply enough into it and you’ll find fossil fuel use," said Vision Super.

"Obviously, that needs to change. However, the changes needed are structural and must happen on a national and a global level.

"There are two things we’re doing that we believe can actually make a difference on the investment front – we’re putting pressure on the government to introduce effective policies by lobbying them, and we are voting at shareholder meetings to force companies to transition away from fossil fuel use towards alternatives, and to disclose and be responsible for their emissions."

Vision Super is aiming to be completely carbon neutral by 2050.

 

The myth of ‘fossil fuel free’ investment
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