When the Uniting Church in NSW and the ACT resolved last year to divest from fossil fuels, it caused quite a stir. While most coverage was positive or simply curious about why a major church denomination would sell shares in BHP Billiton, the mining industry was not impressed.
Divestment campaigners, according to then-CEO of the Australian Coal Association, Nikki Williams, were “anti-development activists attempting to bludgeon society", who have spawned "a new morality of industrial sabotage.” Williams was right to be worried about the power of divestment as one part of the package of addressing human-induced climate change.
Our Synod’s experience shows that institutions can stand up for ethical principles and put their money where their mouths are. With care, organisations can divest themselves of fossil fuels in a way that minimises financial risks. As the “Climate Proofing your Investments” report released last week by The Australia Institute, 350.org and Market Forces argues, "When held over a full business cycle, a diversified equities portfolio which excludes fossil fuel producing companies could perform on par with a fossil fuel inclusive portfolio."
While a growing number of institutions selling shares in fossil fuel companies won’t have any real impact on their share prices, the real target is the social licence of these companies. The experience of the divestment campaign against Apartheid South Africa, my former home country, shows the power of withdrawing money from companies that profit from social evils. Archbishop Desmond Tutu and Nelson Mandela both acknowledged the role of divestment in pressuring the South African government. Archbishop Tutu now supports fossil fuel divestment in the same way.
The fundamental problem we face is that fossil fuel companies have vastly more reserves of coal, oil and gas on their balance sheets than we can safely consume if we are to avoid racing past the 2 degree "tipping point", beyond which climate change mitigation becomes almost impossible.
Even the World Bank and International Energy Agency, hardly "green extremists", have publicly acknowledged that at least two-thirds of these reserves must be left untouched.
There is no question that companies like BHP Billiton and Rio Tinto intend to exploit these reserves – their share price depends on it. In other words, the core business plans of the world’s largest fossil fuel companies are now a threat to the wellbeing of humanity, other creatures and the ecosystems that sustain us.
The Uniting Church in Australia has long advocated for better environmental protection and strong climate policies – both because the environment has intrinsic value and because social justice and environmental sustainability are deeply connected.
We have heard first-hand from our Pacific and Asian neighbours about the effects of sea-level rise on low-lying areas. Droughts in Africa are causing extreme water shortages which put millions of lives at risk. It is always the poorest who are hit hardest, even though they have contributed least to the problem.
Here in Australia we have witnessed summer after summer of extreme weather, including the devastating Black Saturday bushfires. Yet the response of our state and federal governments has been overwhelming support for the rapid expansion of our coal and gas industries. They may claim to accept the science of climate change, but the major parties are in functional denial.
For example, if the proposed Galilee Basin mines in Queensland are fully developed, the annual carbon dioxide emissions caused by burning their coal alone would exceed those of the United Kingdom or Canada.
Faced by the increasing climate emergency, last year the Synod of NSW and the ACT resolved by consensus to divest ourselves from companies involved in the extraction of fossil fuels. The decision adds these industries to tobacco, military equipment and gambling as those we cannot, in good conscience, profit from.
In the months that followed, our investment managers researched and developed an implementation strategy, building on our existing ethical investment guidelines.
We are now implementing this strategy in a staged approach, and will withdraw from shares in some of the world’s largest fossil fuel companies, including BHP Billiton, Woodside and others, over the next 3 years.
We are not alone. Among the institutions having agreed to divest are the United Church of Christ in the United States (the first national religious institution to do so), five Anglican dioceses in New Zealand, the Unitarians in Melbourne and most recently the Uniting Church Synod of Victoria and Tasmania. Also joining the global movement are universities and city and state governments.
In truth, every investment decision is an ethical one. We cannot pretend our use of money is a morality-free zone. If it is wrong to wreck the earth, it is also wrong to profit from that wreckage.