Despite the angry bluster from Abbott, Hockey and the mining industry, the ANU’s decision to divest from fossil fuels is not only ethical, but make makes sound economic sense. Lachlan Barker reports.
The decision by the Australian National University (ANU) to divest $16 million of its billion dollar plus portfolio out of fossil fuels has attracted volleys of abuse from the Federal Government, the mining industry and the conservative press.
It’s been a hell of a storm for the ANU and things aren’t over yet.
Indeed, ANU vice-chancellor Ian Young provided the university with an out, saying early last week:
‘Our consultants stand by their assessments, which we have found persuasive, but should new information come to hand, or flaws become evident in the methodology involved, we would naturally reconsider the assessments.’
But as you will see below, the players who provided the advice to the ANU have no doubts.
And unfortunately for carbon fans, it has put divestment on the front page, with other universities now coming under the spotlight to see if they too will divest.
The ANU then made their decision to make a tiny divestment — less than two per cent of its portfolio. At that, the floodgates of abuse were opened.
Well CAER wasn’t having that, and they released a statement in response:
The Centre for Australian Ethical Research (CAER) completely rejects today’s article by Ben Potter in the Australian Financial Review.
CAER categorically stands by the research it supplied to the Australian National University.
The AFR article is factually incorrect and Mr Potter was aware of this prior to publication, but has chosen to publish anyway. CAER will be seeking a retraction from the AFR.
I contacted the AFR and asked if they will be printing a retraction, but have had no response.
Then EIRIS (Empowering Responsible Investment) weighed in.
The current controversy regarding the Australian National University’s (ANU) decision to divest from seven stocks in their investment portfolio has involved some serious misrepresentation of the role of their research provider, CAER.
EIRIS, as a global leader in the provision of environmental, social and governance (ESG) research, stands by CAER, EIRIS’s Australian research partner, and the methodology it has used to provide research to the ANU.
The market begs to differ as well, as it looks like the investors are, at least at the moment, moving out of fossil fuels and mining in general.
Further support for the ANU’s decision to get out of fossil fuels would appear to be the languishing price of thermal coal.
From a recent peak of US$140 in December 2010, the price of this energy generation source has since dropped steadily such that, in July this year, Australia began officially mining thermal coal at a loss.
Production costs for thermal coal in Australia are presently US$74 a tonne. In July 2014 the price dipped below that mark to US$73.66, in August it held steady at $73.86, before September came and the price dropped 4.35% to US$70.65.
Hardly a good investment Tony