Demanding fossil fuel-free investments is both an urgent issue of conscience and of personal risk management.
We should not be forced to invest in companies that pose immense risks to both investors and society at large. With enough pressure from clients, we believe asset managers will find the courage to act on what they say are their real convictions: investing in a future worth having!
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Join me in signing a joint letter to your asset manager, asking them to create fossil fuel-free ethical investments in South Africa. #InvestFossilFree
Creating a fossil fuel-free investment fund is your urgent responsibilityWe write to you as asset owners and clients, with the implicit support of thousands of other South Africans, and call on you to create a substantially decarbonised (‘fossil free’) SA equity fund as soon as possible. As you are no doubt aware, it is now widely acknowledged that climate breakdown is a matter of existential risk for the world at large, and for Africa in particular. The Covid-19 pandemic has further demonstrated the abundant peril of neglecting scientific advice on long-term global risks and ecological breakdown:
- Southern Africa has been identified by the IPCC as a climate change ‘hotspot’, warming at TWICE the global average. South Africa’s current national emissions trajectory is consistent with taking the world to 3°C–4°C of warming by 2100—and up to 8°C warming for large parts of South Africa, a level that stands every chance of destroying our economy and society.
- The UN Environment Programme recently released research showing global emissions must fall by 7.6% a year over the next decade to avoid catastrophic climate breakdown, emphasising the UN Intergovernmental Panel on Climate Change (IPCC)’s 2018 conservative assessment that emissions must be halved by 2030 and eliminated by 2050.
- South Africa has in recent years been badly affected by drought, almost certainly worsened by climate change, while the health effects of air pollution from coal, and the corruption and poor governance often associated with fossil fuel extraction and use bring massive additional social and economic costs.
- Climate change is estimated to have cut 10% off SA’s national GDP (from a 1990 baseline).
- The social and health effects of coal burning and mining worsen our nation’s inequality and create ‘sacrificial zones’ within South Africa.
- By undermining the global environment that is the foundation of all economies
- By failing to more actively seek climate-resilient investment opportunities
- By ignoring potential stranding of carbon-intensive assets
- By ignoring the destruction of value in asset classes affected soonest by climate change, e.g., agriculture and insurance
- By allowing the poor governance that is all too often associated with companies that neglect environmental responsibilities to go largely unchallenged
- By ignoring the mounting evidence that rigorous ESG screening can improve returns
We, as your clients, instruct you to make active engagement and leadership on climate issues with asset owners and clients an immediate priority:
- Create and capitalise an SA equity ESG fund with hard screening for the most carbon-intensive SA companies (those listed in the Carbon Underground 200, the Global Coal Exit List and the Carbon Majors list), to give your clients the option of partial or complete divestment from these companies.
- Make alignment with science-based carbon dioxide emission reduction targets by carbon-intensive investee companies the pillar of your ongoing shareholder engagement.
- Provide annual assessments of: 1) stranded asset risk over various timeframes for carbon-intensive assets across your portfolios and 2) the carbon intensity of your non-ESG funds/portfolios.
- Work with other asset managers to make an insistence on science-based national emissions reductions a pillar of public advocacy and engagement with government.
- Communicate regularly and systematically with your client base on issues of ethical and sustainable investment.
We believe these actions to be in the best long-term interests of us as investors, your clients, and society, the broader environment within which our assets operate to create value.
We request a meeting with you within six weeks of receipt of this letter to discuss their urgent implementation.
[89 clients of each of the major SA asset managers]
[The threshold for sending the letter to each respective asset manager will be 89 signatories, 89 being the age of Archbishop Emeritus Desmond Tutu, who has declared that, ‘People of conscience need to break their ties with corporations financing the injustice of climate change.’]