SA pen­sion funds ‘must act on cli­mate’

The Witness - - YOURMONEY -

PEN­SION funds in South Africa have a le­gal obli­ga­tion to ac­count for the fi­nan­cial ef­fects of cli­mate change on their in­vest­ments, according to two groups lob­by­ing money man­agers to pay closer at­ten­tion to the is­sue.

Share­holder ac­tivists Just Share and en­vi­ron­men­tal law or­gan­i­sa­tion Clien­tEarth have writ­ten to more than 50 funds in South Africa about their duty to savers. The lo­cal in­dus­try over­sees about R4,2 tril­lion in re­tire­ment in­vest­ments, according to the two groups.

Le­gal opin­ion com­mis­sioned by the cam­paign­ers shows that fail­ing to meet the re­quire­ment on cli­mate change “would likely amount to a breach of duty by the board of a pen­sion fund”, they said in a joint state­ment yes­ter­day.

Oil com­pa­nies and Nor­way’s sov­er­eign wealth fund are re­spond­ing to cli­mate change through steps rang­ing from plant­ing forests to di­vest­ing from fos­sil fu­els. South Africa is de­pen­dent on coal for al­most all of its power gen­er­a­tion and un­em­ploy­ment of about 27% com­pli­cates the de­bate around re­duc­ing this re­liance, should it lead to clos­ing mines and job losses.

The ul­ti­mate ef­fects of cli­mate change and the cost of tran­si­tion­ing to a low-car­bon econ­omy should form part of money man­agers’ in­vest­ment strate­gies, Tracey Davies, ex­ec­u­tive di­rec­tor for Just Share, said by phone.

“The pri­mary rea­son is the fidu­ciary re­spon­si­bil­ity for the funds to in­vest in the long term.”

South Africa’s 2030 en­ergy plan sees coal-gen­er­ated power drop­ping to less than 50% of the to­tal, as in­vest­ment in­creases in re­new­ables such as wind and so­lar.

But, South African com­pa­nies have been high­light­ing some of the po­ten­tial costs. An­glo Amer­i­can Plat­inum, the world’s big­gest pro­ducer of the metal, said on April 9 that a planned car­bon tax in the coun­try will add cost pres­sures for mar­ginal and loss­mak­ing op­er­a­tions.

Re­ac­tion from funds that re­sponded to the cam­paign­ers’ ques­tions ranged from in­ter­est in dis­cussing the is­sue to ask­ing whether they were be­ing ac­cused of do­ing some­thing wrong, Davies said. — Bloomberg News.

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