See our new resource here:
jointly published by The Climate Institute and ARRCC in December, 2016
Our religious traditions remind us of our responsibility to care for the earth as a precious gift. If we want to protect life on earth, we must move quickly to renewable energy and leave most of our coal, oil and gas in the ground. Instead, Australia is one of the most carbon-intensive economies in the world.
Our religious institutions can play a powerful role in moving Australia's economy out of fossil fuels and into clean energy and we can influence those to which we belong to Go Fossil Free.
See this powerful Youtube film clip of Archbishop Emeritus Desmond Tutu
and the statement he signed along with a hundred other theologians and faith leaders globally.
Fossil fuel industries and social responsibility
Analysts have calculated how much more carbon humanity can afford to emit without overshooting the internationally accepted threshold of 2°C (Unburnable Carbon 2013 report, London). This is only one-fifth or so of current known oil, gas and coal reserves, yet the value of shares in mining companies is based on the assumption that all those reserves will be burnt. It is becoming increasingly well recognized that this is not only creating a “carbon bubble”, but that continuing to invest in these shares is no longer meets a strong definition of “socially responsible”. In Bill McKibben’s now well-known words: “If it’s wrong to wreck the planet, then it’s wrong to profit from that wreckage.”
Fossil fuel extraction companies have shown a lack of ethical integrity and transparency. The companies do not disclose the important systemic risks involved in fossil fuel reserves they hold which cannot safely be burnt. They continue to spend billions on further exploration and on unconventional fossil fuel extraction, eg, tar sands and coal seam gas which have even more dangerous environmental effects than conventional assets.
Finally, for decades the fossil fuel industry, including “Big Coal” in Australia, has funded climate denial think tanks and aggressively spread misinformation, for example, about “clean coal”. Each year the industry routinely uses its considerable financial power to employ influential lobbyists to ensure legislation is passed which limits environmental action and maximizes its profits. At times it mounts a public advertising campaign against such proposed legislation, usually with exaggerated claims of potential job losses. (See Guy Pearse, David McKnight & Bob Burton, Big Coal, UNSW, Sydney, 2013.)
Further resources on the moral case:
- For a more in-depth treatment of the moral argument for moving your money out of fossil fuels, see “Divest and Reinvest. Now.” by Rev. Fletcher Harper of GreenFaith USA.
- For a specifically Christian perspective on the moral argument, including biblical references, see the “Bright Now” report of Operation Noah in the UK.
See 350.org’s inspirational film clip: http://act.350.org/signup/math-movie/
Religious organisations that have divested from fossil fuels
ARRCC as an organisation switched to BankMECU in mid-2012, but the first large religious organization to pass a resolution to Go Fossil Free in Australasia was the NSW/ACT Synod of the Uniting Church in April 2013. Similar resolutions have now been passed by Melbourne Unitarian Church, the Canberra Regional Meeting of the Society of Friends, the Anglican General Synod of Aotearoa/New Zealand and Polynesia (May 2014) and the Moetzah - the Council of Progressive Rabbis of Australia, New Zealand and Asia (June 2014).
Altogether well over one hundred religious organisations have passed resolutions to divest from fossil fuels, mostly in the USA and New Zealand. Many have been in the United Church of Christ, Unitarian and Episcopalian trditions, eg, Massachusetts United Church of Christ. The first Catholic University to decide to begin divesting from fossil fuels is Dayton University in the US, in late June 2014.
Increasingly, Australian religious institutions are joining the list. They include:
- Uniting Church Synod of Victoria/Tasmania
- Society of Friends (Quakers) in Australia
- Uniting Church in Australia Assembly
- Anglican Diocese of Canberra-Goulburn
- Anglican Diocese of Perth
- Anglican Diocese of Melbourne
- Uniting Church Synod of Western Australia
- Presbyterian Church of Aotearoa/New Zealand
- four Catholic religious orders
While these religious organisations are not large financially, their achievement is a moral one. They draw public attention to the immorality of the way fossil fuel industries pursue their profits and challenging their social license to operate.
Your faith community, place of worship, religious order, theological college or religious institution can join others taking a stand. People within your organization may express a variety of concerns. You will likely find that the paper prepared by those behind the Uniting Church decision address many of these concerns in their responses to objections raised.
The world-wide movement
The global fossil fuel divestment movement is the fastest growing divestment movement in history. An accelerating number of institutions and individuals are moving their money out of planet-heating fossil fuels and into climate solutions. The total assets guided by some form of divestment policy was $3.4 trillion at December 2nd last year, 50 times more than what was up for divestment 12 months earlier. It sounds like a lot of money, but it’s a small amount compared to the 100 trillion-plus invested in the usual way.
Some of the biggest investors are getting with the program. PFZW, the $183 billion Dutch pension fund, has pledged to halve its carbon footprint by 2020 while increasing its investments in climate solutions fourfold. AXA, the French insurer with $1.6 trillion in assets under management, is selling off its stakes in mining companies and electric utilities deriving over 50 per cent of their turnover from coal, while tripling its green investments. The biggest sovereign wealth fund, Norwegian Government Pension Fund and the biggest pension funds in the US - CalPERS and CalSTERS - have made divestment commitments.
For more on this, see Divest Invest Philanthropy's paper "Doing Good. Performing Better."
Counter-campaign by fossil fuel lobby
The global movement is disturbing the fossil fuel lobby to the extent it is now mounting a counter-campaign, in which they are targeting religious organisations specifically. They argue that the world’s poor will not be lifted out of poverty without the use of fossil fuels. ARRCC member, Professor Neil Ormerod has responded to their arguments in the Canberra Times, pointing out the many advantages of renewable energy for the world’s poor. Developing country governments themselves are expressing their preference for renewables, as exemplified by the Small Island Developing States and India.
Practicalities of divestment
It must be understood, we are not providing financial advice here. We are suggesting these institutions on purely ethical grounds.
For small institutional investors, a phased approach is recommended, starting with the companies with most exposure to coal, oil and gas projects. The first step is to assess the level of exposure of various companies. Some companies are more “dirty” than others. The Australia Institute’s full report, Climate Proofing Your Investments, categorises companies in tiers, from those with most exposure to those with least. The recommendation is to start by screening out investment in companies in tiers one and two in the first couple of years, and tiers three and four after that.
Your religious body could pass a resolution instructing your asset managers to:
- Place an immediate prohibition on loans to new fossil fuel extraction projects and the infrastructure required to enable them
- Divest from direct ownership of any managed funds that include holdings in fossil fuel companies within five years.
For the possible wording of such a resolution, see the resolutions of the religious organisations mentioned above.
Divesting from fossil fuels is important in its own right, but there would be great benefit in also publicly announce such a move. Going public sends a message that industries which are causing environmental destruction should not enjoy the privileged place they have in society, thus challenging their social license to operate.
350.org has developed numerous resources to guide organisations in their quest to go fossil free.
In terms of practical steps, the following is not financial advice, but it’s based on ethical considerations only. It is true to say that renewable energy companies in Australia have delivered high risk or low returns in recent years, because of an unstable regulatory environment. Internationally, however, renewable energy is generally lower risk. Also re-investing responsibly could mean re-investing in a range of socially responsible options.
One possibility is to move your organisation's money into Ethinvest, which does screen out fossil fuels. Australian Ethical is another firm which does so. Then there’s Ethical Investment Services in Melbourne.
Likewise if your organisation's money is in a conventional bank, especially one of the Big Four, you may wish to have a look at the Market Forces bank comparison list: http://www.marketforces.org.au/banks/compare
And then various banks’ credit ratings: http://www.relbanks.com/best-banks/australia
No bank is 100% fossil free but there are some which have minimal exposure to fossil fuels, such as Bendigo Bank, Bank Australia, Adelaide Bank, Newcastle Permanent, Victorian Teachers Mutual and Credit Union Australia and others on the Market Forces list.
To make your action more effective, remember to let your old institution know why you are moving your savings!
Will this mean lower returns?
In a word, no. The world’s energy market is in transition. While coal prices are in free-fall, solar is the fastest-growing power source around the world. Solar module prices have fallen 75% in five years, with solar achieving grid parity in many places. IEA’s World Energy Outlook 2015 report documents that renewable energy is already the second-largest generator of electricity in the world and will overtake coal by 2030. Africa, China, parts of South America and India are expected to leapfrog the dirty development of the West. The economic forces towards decarbonisation of the global economy are now unstoppable.
Climate risk is also affected by political factors which are pushing for regulation to limit greenhouse pollution. Public demand for climate action was a driver behind the successful outcome of COP21, which in turn has given momentum to global efforts to curb emissions. Feeding into this public demand is the rising concern in many countries around the health impacts of dirty energy-related air pollution.
Already the results are showing up in returns for investors. The well-respected MSCI performance index demonstrates that investments excluding fossil fuels have produced better returns in recent years than those which have not.
If you'd like to see how much better off your organisation would have been if it had divested from fossil fuels three years ago, you can plug your equity portfolios into: decarbonizer.co
And yet, fund managers hold on to the old ways. At a Divest-Invest Conference hosted on April 5th by The Climate Institute, former Prime Minister John Hewson expressed exasperation that ‘financial markets consistently underestimate risk’. Hewson believes that climate risk is currently higher than the risk of a sub-prime crisis before the Global Financial Crisis!
The papers and videos from the Divest-Invest Conference held in Sydney in April, 2016, are all on the website: http://www.divestinvest.org.au/conference-resources/
Divestment is not the only strategy available to achieve the desired goals. There is also:
- Shareholder advocacy
- Civil disobedience
Religious institutional investors have been pre-disposed towards shareholder advocacy. The argument goes: While we remain shareholders or customers, our advocacy stands a much better chance of being successful. Shareholder advocacy is more in keeping with Christian ethics than divestment.
However, there is no evidence that even the most determined advocacy will deliver the changes needed in the required time frame, according to Divest Invest Philanthropy which has documented a raft of examples. Indeed, evidence is piling up that fossil fuel companies have been secretively doing all they can to promote climate denialism and frustrate legislation which would favour renewables. In my view, the ethical response to this level of moral bankruptcy is to ‘shake the dust off your feet’.
Some companies may be open to influence, such as banks, super funds and insurance companies, but fossil fuel companies themselves have not responded substantially to shareholder advocacy to date. The European companies, Shell and BP, have been influenced to some extent over environmental degradation and human rights abuses. However, the North American companies, Exxon Mobil and Chevron, have largely been intransigent in response to shareholder advocacy. The experience of the Christian Brothers Investment Services and the Interfaith Centre on Corporate Responsibility in North America bears this out. In the words of Naomi Klein, lots of companies have bad business practices, but “with the fossil-fuel industry, wrecking the planet is their business model. It’s what they do.” In other words, their business model is the problem. The only way they can contribute to long-term sustainability is by closing down.
In Australia, the Australasian Centre for Corporate Responsibility is attempting to engage in shareholder advocacy with regard to fossil fuel investment by the "Big Four" Banks and is looking for various forms of support.
Advocacy has its place but tactically through dis-investing we believe that we can more effectively send a message to the wider community about the dangers of continuing with fossil fuels.
State and Federal governments in Australia are eager to streamline approvals for fossil fuel expansion projects, rendering political advocacy relatively ineffectual. Hence, many people of goodwill believe that non-violent direct action has become necessary. Many hundreds have already been arrested in Ghandian style protests. They need people of faith to help show their cause is a legitimate one.
Some actions will be more low-key, others will be more challenging. Religious people have a long history of peaceful, nonviolent resistance. They include people like Mahatma Ghandi, Martin Luther King, the Berrigan brothers and, in Australia, Donna Mulhearn.
If anyone is interested in participating, please please let Thea Ormerod know on email@example.com or (02) 9150 9713.
We can also take action as individuals and households: