Commenting on the announcement of NGS Super’s divestment from oil and gas stocks, Brynn O’Brien, Executive Director at the Australasian Centre for Corporate Responsibility (ACCR), said:
“Divestment should be a tool of absolute last resort. Climate-aware institutional investors considering divesting should be thinking very hard about what power they are giving up. If investors most agreeable to rapid decarbonisation sell their shares, they lose their influence. Decisions will be made by those around the table.
“Reducing real-world greenhouse gas emissions should be a higher priority for long term investors than scrubbing their portfolios of carbon.
“While divestment from fossil fuels stocks may be attractive to funds from a financial or marketing perspective, there is little if any evidence that it has an impact on real world carbon emissions.
“On the other hand, there is evidence that sustained and escalating shareholder pressure can have an impact on company decision-making.
“While we agree that companies like Woodside and Santos have left it too late for transformation into, for example, renewable energy businesses, there are still many decisions that shareholders can influence, including whether these companies spend shareholder money on new fossil fuels developments.
“Shareholders can play a crucial role in ensuring that assets are wound down rather than sold to operators who intend to extend their production lives. Take, for example, BHP’s recent decision to wind down, rather than sell, the Mt Arthur coal mine, a decision which will keep 240 million tonnes of coal in the ground. We need to see more of this.
“Shareholders can and should also take action, through strategic voting, to influence the composition of company boards.”