Last month we forewarned you that the Board of Local Government Super, we expected by a seven nil margin, was likely to abandon its historic position of refusing to invest in uranium and nuclear. We expected things to happen at a meeting on 1 October but we haven’t been very well informed by our director on the Board and some of the advice contained within that article was incorrect.
We now understand that the Board unanimously voted in September to abandon the historic negative screen that prevented the investment in nuclear and uranium companies. Unanimously means that our director on the Board voted contrary to our historic values and principles.
The decision was part of an increased commitment to a low carbon future and the importance of low carbon investments and moving away from reliance on fossil fuels. We support that of course, and during my time as a director on the Board, we worked hard to have LGS acknowledged as the number one fund in Australia and in 2012 internationally for its investment strategies hedging against carbon risks as measured by the Asset Owners Disclosure Project.
In 2000 the Board resolved to never own tobacco and to introduce a range of screens against other investments which would not be describable as responsible for environmental, social or governance reasons. This ruled out nuclear and uranium.
In the argument about energy generation in the future, there is a division of opinion on encouraging renewable energy only, or a combination of renewable energy and nuclear energy. Apart from embracing technology which has been demonstrated to be incapable of properly managing risks, accident prone with devastating consequences and a security risk, nuclear is attractive to some. It’s usually attractive to some in this context who were attracted to it anyway.
LGS Chair Bruce Miller and LGS Deputy Chair Martin O'Connell
LGS Chair Bruce Miller and Deputy Chair Martin O’Connell have always been soft on nuclear and uranium - even in those years when refusing to own it enhanced the Fund’s reputation and didn’t cost the fund a cent in investment returns. Some people just like it. In handing over to our new director Joanna Davison in November 2013, Joanna was briefed on the risks:
Sadly we also lost Sam Byrne. Sam was an ex-Green Mayor of Marrickville and a great ally on all the ESG/carbon stuff and, (particularly given what is an emerging soft view by Martin and Bruce) strong and supportive against nuclear/uranium. And
Martin is a bit soft on reviewing “nuclear” as part of our sustainability overlay and so is Bruce. Beware.
In making the decision in September, the Board was provided with information showing that there had been no loss in investment returns as a result of not owning nuclear/uranium businesses and, of course, there is no guarantee that investing in these questionable businesses will do any better in the future. It means the Board abandoned the historic position understanding it had not financially damaged the Board and that there was no guarantee of any benefit in the future.
All they can be sure of is that they now embrace a risk they were not prepared to take in the past with the dangers of waste storage, nuclear proliferation and nuclear terrorism. No losses over the last decade and no guarantee of profit in the future.
Chernobyl was 1986, and the nuclear lobby was getting cocky. Then came Fukushima. What’s next?
But LGS has taken the view that nuclear has a role. In the media release announcing it they mistakenly say renewable energy “will not be able to meet all the energy needs around the world in a low carbon future” and “nuclear energy is currently the only proven alternative to fossil fuels that provides baseload power capacity.”
Both these statements are challengeable and those who challenge them believe they are demonstrably false. This is what Clive Hamilton describes as the “baseload power myth” and in his book Requiem for a Species claims:
In countries that already have experience with nuclear power, including well-established regulatory and waste-disposal regimes, it takes at least a decade for a new nuclear power plant to be planned, approved, built and commissioned. Construction time alone now averages six years. The International Energy Agency envisages a four-fold increase in the amount of electricity generated by nuclear power by 2050. This would require the construction of 32 nuclear power plants every year until then, a huge expenditure that would reduce carbon dioxide emissions from the energy sector by only 6%. Wind farms could generate the same amount of power for 60% of the construction cost without the continuing expense of supplying fuel and disposing of waste and with greater emission savings.
A debate at the Board meeting which involves people saying things like “the wind doesn’t blow always” or “the sun doesn’t shine at night” ignores the rapid development in battery technology capable of storing energy generated by renewable means. It’s old-fashioned and backwards-looking. Battery technology will be available sooner than any new nuclear power station.
Leaving aside the risks of waste storage, proliferation and nuclear terrorism, the real damage is that the money spent by government or the private sector in developing nuclear generation is at the expense of the four or five genuinely renewable forms of energy which, operating together and in conjunction with each other, are the future without the risks.
LGS Board members glowing in dark
We apologise for the inaccuracy in the last issue about the seven nil vote. It’s now clear that our representative on the Board voted to support the change at the Board meeting in September and that this issue had been considered by the Board as far back as February without any information being filtered back to depa as the shareholder. This is completely unsatisfactory.
As a consequence of having it confirmed that she had failed to keep us abreast of developments over an eight month period, failed to tell us of the resolution at all and had voted for the resolution despite telling us she had abstained, within 24 hours the Committee of Management had unanimously resolved to remove her from the Board and replace her with someone who better understands our values and commitments.
