Sam Sicilia, investment chief at the $54 billion super fund Hostplus, has slammed shareholder activists lobbying for superannuation funds to sell their fossil-fuel assets saying divestment is an ineffective way of combating climate change.
“In essence, divesting mutes you – makes you impotent,” he said.” You can’t take action against a company.”
Sicilia said the super fund that represents the hospitality and tourism industries is sticking with its strategy to engage with “dirty energy” companies while adopting investment strategies that transition to a low-carbon economy. His comments come as interest groups call for UniSuper and HESTA to sell out of companies that are incompatible with the Paris climate agreement.
Commenting on plans by some of the world’s largest investors to reduce their fossil fuel exposure, the investment chief said they had divested for ideological reasons before adding that “ideology doesn’t stop emissions.” He also said that the fund was unwilling to sell out of sectors at the expense of returns.
“Is it the role of an investor to force companies towards net neutral carbon by 2050 and, if that is correct, is this an admirable aim for tilting your investments in that direction?” he asked. “Everything we do is directed at members’ retirement benefit. I can’t fund an arts project because I love art, it’s got to make money. We are not allowed, and nor do I want to make investments purely because it’s good for the planet.”
The CIO said that assessing the risk of stranded assets involved making some judgements about the supply of renewable energy. He said that 75 per cent of world energy was still created from burning fossil fuels.
“Unless you can show me how much the demand for coal will disappear in the next five years … divestment of a coal company doesn’t make sense,” he said. “The share price could rise for the next 15 years before the asset became stranded.”
Sicilia said Hostplus would rather invest in fusion – a clean energy source that could replace fossil fuels. The carbon-free, combustion-free source of energy is now being fast tracked, thanks to collaboration between MIT and the US-based Commonwealth Fusion Systems. CFS is one of a few private ventures that are building reactors to heat gases inside a protected chamber to near 100 million °C in hopes of developing the holy grail of clean energy.
At a session on clean energy at the CMSF 2020 conference in Adelaide on March 18-20, Sicilia will be introducing CFS management to delegates.
“Even if we could stop putting greenhouse gases into the atmosphere, climate change scientists are saying that’s not enough,” he said. “There is already so much concentration in the atmosphere of these greenhouse gases that saying we need to remove these gases from the air is the same as saying we will remove salt from the from the oceans.”
Hostplus, which is a member of the Climate Action 100+ group, has invested $1.6 billion in venture capital including in water purification and clean energy.