Green activists pressuring funds over their investment decisions are wasting their time – and doing nothing to reduce climate change, a senior super fund executive has said.
Chief investment officer with superannuation fund Hostplus, Sam Sicilia, has told a superannuation conference in Hobart that activism demanding that companies divested interests in fossil fuel or tobacco companies was pointless and did nothing to sway those companies’ views.
“Divesting your coal shares, for example, achieves nothing,” Mr Sicilia said.
“It only transfers ownership of coal shares from one investor to another. The only way to dispose of a bad asset is to sell it, and the only way to sell it is find another buyer.
“Yes divestment makes us feel good, we can disclose on our website that we don’t hold those assets. But tell me, how does the transfer of coal shares from you to somebody else affect that coal company?”
Mr Sicilia said it was far more effective for investors in those companies to engage with the company to advocate for change.
“Asset owners have a right to engage, and collective engagement alongside like-minded shareholders is a very powerful thing.”
Mr Sicilia’s comments come in a week where the founder of Australian tech giant Atlassian Mike Cannon-Brookes weighed in to the debate on corporate activism, announcing he would encourage his 3500 staff to take part in a global climate change strike.
“Corporations have to deal with it; they have to deal with their own impact and their own footprint as companies,” he told Nine media.
“It’s a crisis that demands leadership and action. But we can’t rely on governments alone – sadly, in Australia, we can’t rely on them at all.”
But far from being sceptical about the risks of climate change on the environment and the economy, Mr Sicilia said the risks were “far worse than we all think”, declaring it the “most difficult issue facing humanity”.
He added that the risks of climate change to business and investors were not just imminent, but immediate.
“We should think about climate change as the everyday reality we are living through rather than thinking about it as a looming threat that exists in the future,” he said.
“What we really need to know is what the more immediate impact of climate change will be … because it’s going to happen a lot sooner than we all expect. Unless we do something about it pretty soon, at the current rates of global warming, it’s inevitable that climate change will lead to the end of human life.”
But he was, nevertheless critical of trying to achieve that change by lobbying investment funds or shareholders to sell shares in fossil fuel companies.
“If I find a buyer [for those shares], that buyer is either naïve about the activist or knows about the activist and just doesn’t care.
“So all divestment does is concentrate the shares in the hands of people who are immune from activism. It does nothing to most companies. Nothing!”
One audience member challenged that view, saying that divestment could increase the cost of capital for those companies.
But Mr Sicilia countered, saying that fossil fuel or tobacco companies were generally cashed up and in little need of capital.
“With cashflow-positive companies like coal or tobacco companies, the first and last time they they went to capital markets was then they IPOed in about 1810 …. They don’t need capital markets.”
The New Daily is owned by Industry Super Holdings