Charity investments and the low carbon transition

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Julie Hutchison hosted a panel discussion during Good Money Week on how charities are responding to the low carbon transition with their investments

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16th October 2017 by TFN Guest 0 Comments

When I last reported on this subject for Third Force News in April 2016, a more binary set of choices appeared to exist for charities in Scotland who had concerns about fossil fuel investments. The debate at that time was limited to engagement and divestment. On the one hand, a charity could retain its shares in, for example, oil companies and be an active shareholder, looking to vote on certain resolutions at corporate AGMs to encourage change via those means. Alternatively a charity could choose to sell its shares, if it viewed the balance of risk to be against that sector, on grounds of financial risk, reputation risk or that the sector is at odds with the charity’s purposes. 

Eighteen months on and the debate has evolved as a range of approaches emerge. A recent panel discussion in Edinburgh during Good Money Week looked beyond oil companies onto other ways charities can support the transition to a lower carbon economy, and what the trigger moments for change will be.

Julie Hutchison

Julie Hutchison

The three speakers approached the subject from different starting points. Tom Ballantine, chair of Stop Climate Chaos Scotland, set out the global and Scottish context to the subject, including commentary about the new Climate Change Bill in Scotland. A key driver of change was the speed of scientific and engineering development, making access to new technologies ever faster and more affordable. The transition towards hybrid and electric cars was highlighted as a win, with norms changing quickly. The moral case was made for why organisations should respond to the damaging effects of our changing climate, disproportionately affecting those who can least afford to adapt to them.

Dave Gorman, director of Social Responsibility and Sustainability at University of Edinburgh continued the discussion by expanding the view of how a charity can have impact in this area. Given the scale of the university’s activities, Dave pointed to ways the university could have a broader impact through its estate and operations, collaborating with other universities to amplify and co-ordinate change on a greater scale. The research activity of the Edinburgh Centre for Carbon Innovation was given as another example of how the university is investing in supporting the transition.

Finally, Andrew Mason, responsible investment analyst at Standard Life Investments, discussed the possibilities which remain with engagement and working to persuade companies to adopt better practices. A financial challenge facing oil companies was identified, as reserves of fossil fuels remain in harder-to-reach locations and cost more to extract. The capital expenditure involved in extracting those reserves then had to be balanced against the likely sale price achievable, with the result that eventually it could become uneconomic to carry out extraction activities; another driver of change.

The panel pointed to unresolved issues connected to the low carbon transition. As the need for better batteries becomes critical in terms of storage of renewable energy, the human rights spotlight turns to cobalt mining in the Democratic Republic of Congo and the question of child labour. The demand for new technologies brings new challenges, and the discussion came full circle back to the role of engagement to bring pressure for change.  

Julie Hutchison is the charities specialist at Standard Life Wealth. Tweet @juliekhutchison