By Leslie Goldmann
The Asset Owners Disclosure Project (AODP) has announced it will investigate whether the investment practices of Australian universities are in stark contrast with what their academic climate change research is telling them.
The AODP is a non-profit organisation established to find out how fund managers manage climate risk on their members’ behalf. Julian Poulter, Chief Executive Officer of the Asset Owners Disclosure Project, says, “We got into this because we could not find any disclosure at all about how the big institutional investors were managing climate risks.”
Climate change is a unique risk to investors because if the Government introduced tougher regulations surrounding carbon emissions, they would lower the profit of companies that produce the most carbon and leave investors scrambling for the exits at the same time.
Mr Poulter says, “Climate change is a risk for long-term investors because it is highly certain, thanks to the climate science being highly certain, and at some point governments will have to regulate in a very short period of time. We all know what happens, when everyone tries to sell at the same time.”
The AODP normally targets large institutional investors but decided to investigate universities due to both the universities’ climate science research and their trusted status.
Tom Swann, researcher at The Australia Institute (TAI), says, “Our universities are among the most trusted institutions in society. People look to them for moral leadership, but they also have a fiduciary duty to manage their finances responsibly.”
The AODP suspects universities are not practising what their climate science is teaching them. Mr Poulter says, “Climate science is very prevalent among the universities. It would be very, very strange if the universities themselves were not looking at climate change risk on the investment side.”
Powerful conflicted interests are blocking the Government from enacting tougher new carbon emission regulations. “Neither the boards of these companies nor the fund managers are well incentivised over a long enough period,” Mr Poulter says. “There will doubtless come a tipping point where these vested interests are overcome.”
Lyndon Schneider, National Campaign Director for the Wilderness Society, thinks the tipping point will come when the boards inside companies face responsibility for carbon pollution.
“Where I think the real power is going to come, eventually, is inside the boards because they are having an increasingly difficult time of reconciling their own personal views and values with that of the personal interests of their children and grandchildren who live on the planet and their corporate responsibilities.”