Has Local Government Super dumped uranium and nuclear yet?
- Details
- Published: Tuesday, 30 November -0001 10:04
Not yet but, leaving that aside for a moment, LGS has continued its high reputation as a responsible investor. Again this year it was the top rated fund internationally in the Asset Owners’ Disclosure Project which ranks institutional investors across the world on the disclosure of carbon risk and steps they are taking to manage it.
The Fund has just won Super Ratings Infinity Award for leadership in sustainable and responsible investment for the fourth time. The $9 billion fund now has more than $5 billion of members’ savings in sustainable and responsible investment strategies, including shares, private equity and direct property assets, the largest commitment of any super fund in Australia.
The Sustainable Australian Shares option in the fund returned 20.87% in the 2013/14 financial year until May – partially because the fund was an early adopter of moving out of the mining industry which, shortly thereafter, became an underperforming sector.
LGS is the only superannuation fund to win the Infinity Award four times and ranking number one in the world again in the Asset Owners’ Disclosure Project remains its most significant and international achievement.
But sadly the fund retains its new commitment to nuclear and uranium stocks. Our representative director on the LGS Board Sam Byrne is monitoring the returns as they may be affected by this unpleasant investment category and while LGS satisfied a couple of zealot board members fascinated with nuclear energy, it doesn’t mean LGS will always be committed to that energy source.
It’s hard to regard nuclear energy as a “clean” alternative energy option. Certainly Germany doesn’t - regarded as the “Green superpower” of Europe, they are phasing out nuclear power stations and anticipate that all will be closed around 2022.
If Germany can slash its greenhouse gas emissions by 40% on 1990 levels by 2020 (and by 55% by 2030 and 80-95% by 2050) and replace them with renewable energy, there is a lesson here - not only for Australian policymakers, but for the investment strategists within our own super fund.
It’s now 330 days since the fund resolved to lift the screen preventing investment in nuclear and uranium that had been in place for a decade. While this was done under the illusion that nuclear power generation resulted in zero carbon emissions, and that was all that mattered, (apart from the astonishing emissions involved in the construction of power stations) our director on LGS Board Sam Byrne, is monitoring how the removal of the screen affects returns and whether this compensates for the reputational damage already done. And there is always the unmanageable risk.
As Chernobyl and Fukushima showed, you never know …