Running out puff for investors? Photo: Paul Jones
A global movement to divest from fossil fuels will get some local impetus with the launch on Thursday of the country's first fossil-free superannuation fund.
The fund, Future Super, aims to secure $1 billion in funds within "the next few years", said Simon Sheikh, a former activist with GetUp! and the fund's co-founder and managing director.
"That will send a message to the fossil-fuel industry that their social licence is being taken away from them," Mr Sheikh said.
"There's no doubt that the market is heading in this trajectory."
Stanford University, a leading US institution, said in May it would dump coal stocks from its $18.7 billion endowment, while last month the University of Sydney announced it would halt further investments from its $1 billion funds "in the coal and consumable fuels subsector of the ASX".
Mr Sheikh credited US climate hawk Bill McKibben as an inspiration for Future Super with his view that "if it's wrong to wreck the climate then it's wrong to profit from its wreckage".
The fund will not only screen out companies that extract or process fossil fuels but all the banks that finance such projects – meaning it will avoid ANZ, Commonwealth Bank, NAB and Westpac.
Bendigo Bank has provided seed funding and advice to Future Super. The bank in June issued a statement confirming it does not currently lend to projects in the coal and coal seam gas sector.
"Our bank recognises that many of our customers want access to financial products that help them to reduce their impact on the environment," a bank spokeswoman said.
"Supporting Future Super is one way for our customers to achieve their financial goals while minimising their environmental footprint," she said, adding that Bendigo Bank would not invest in the fund nor offer it through its distribution channels.
After screening out other sectors, such as tobacco and gambling, Future Super will consider investments in just 25 of the top 100 ASX companies, and a further 45 of the next 200 largest listed companies.
Future Super will also make investments in fixed-income and private equity, with a domestic-only focus for now.
Nathan Fabian, chief executive of the Investor Group on Climate Change, said many institutional investors were reassessing the risks associated with their fossil-fuel related holdings, with the prospect that the value of carbon-intensive companies might drop sharply if countries take decisive action on climate change.
"There's a lot of analysis and work going on," Mr Fabian said.