Managing an ethical investment portfolio requires constant care, awareness and analysis. A sector that has particular significance currently is energy. We strongly believe in a lower carbon future and that society needs to transition away from fossil fuels as quickly as possible, but reflecting this belief in our investment strategy requires a balanced and considered approach.
Our Chief Executive, Mark Wilcox, outlines our thinking around fossil fuels:
Anglican Financial Care (who manages the Christian KiwiSaver Scheme) has a policy on fossil fuels but this does not extend to full divestment.
First and foremost, we stand by biblical principles which infer creation is to be cared for and protected for future generations. In our opinion, the 2015 Paris Agreement targets infer risks to companies within the energy sector who don’t appropriately adapt their business models. We have elected to respond by excluding exposure to coal and tar sands companies and to rank other energy companies according to their extent of contribution towards a lower-carbon world.
We recognise that fossil fuel divestment is a matter of importance to the Church and that some of us share a sense of frustration with the lack of progress towards the Paris Agreement targets. However, while the future is renewables and green technology, and progress has been made, fossil fuels will still be the planet’s dominant fuel source for a long time yet (likely at least until 2050). Accordingly, there would be considerable financial risk to our members in taking a full divestment approach at this stage.
In recognition that part of the solution lies with alternative energy solutions, we have made a significant investment in a global alternative energy fund. We also have a long-standing forestry investment. We recently sold the cutting rights to the trees but has retained full ownership of the land and is currently re-planting.
For a more detailed analysis on investing towards a renewable and green technology future, we recommend a Wells Fargo white paper: It’s Not Easy Being Green—The Future of Fossil Fuels.
The bottom line is that our lives revolve around energy use, and lots of it. Fossil fuels generate most of that energy today. Recent progress in renewables and green technology has been made, and it is the future. The green movement has investors believing that fossil fuel use will soon die. We are doubtful. It takes energy to create energy, and green technologies often require fossil fuel use too. Additionally, emerging market energy use continues to climb higher. By 2050, the planet’s dominant fuel source will still likely be fossil fuels. For the planet’s sake, let’s hope that green progress has a higher gear still.
If you would like to check for yourself how Christian KiwiSaver Scheme investments mitigate the impact of climate change or to see – as ethical investors – what we do invest in, visit our website or call us on (0508) 738 473.
