Business Maverick

Activists Push South Africa Pension Funds Over Climate Costs

By Bloomberg 16 April 2019
Caption
Power cables from the state run power provider Eskom are seen running through the morning mist in Johannesburg, South Africa, 18 June 2018. The countries only major power supplier has been experiencing power cuts over the past days due to an ongoing wage related strike. As winter takes hold over the country the usage of power has risen partly causing the power outages EPA-EFE/KIM LUDBROOK

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 organization ClientEarth have written to more than 50 funds in Africa’s most-industrialized nation about their duty to savers. The local industry oversees about 4.2 trillion rand ($300 billion) 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 Monday.

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 with unemployment at about 27 percent this complicates the debate about reducing this reliance, should it lead to mine closures 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 percent 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 Ltd., the world’s biggest producer of the metal, said April 9 that a planned carbon tax in the country will add cost pressures for marginal and loss-making operations.

Sasol Ltd., the biggest manufacturer of fuel from coal, wants to “be part of the solution” in terms of what South Africa agreed to in the Paris Accord, co-Chief Executive Officer Bongani Nqwababa said Friday in an interview. The company, which is held by a number of pension funds, plans to set its own emissions targets next year, he said.

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. The initial purpose of the letters was to raise awareness. “You’ve got to understand how exposed your portfolio is to climate policy.”

Gallery

Want to watch Richard Poplak’s audition for SA’s Got Talent?

Who doesn’t? Alas, it was removed by the host site for prolific swearing*... Now that we’ve got your attention, we thought we’d take the opportunity to talk to you about the small matter of book burning and freedom of speech.

Since its release, Pieter-Louis Myburgh’s book Gangster State, has sparked numerous fascist-like behavior from certain members of the public (and the State). There have been planned book burnings, disrupted launches and Ace Magashule has openly called him a liar. And just to say thanks, a R10m defamation suit has been lodged against the author.

Pieter-Louis Myburgh is our latest Scorpio Investigative journalist recruit and we’re not going to let him and his crucial book be silenced. When the Cape Town launch was postponed, Maverick Insider stepped in and relocated it to a secure location so that Pieter-Louis’ revelations could be heard by the public. If we’ve learnt one thing over the past ten years it is this: when anyone tries to infringe on our constitutional rights, we have to fight back. Every day, our journalists are uncovering more details and evidence of State Capture and its various reincarnations. The rot is deep and the threats, like this recent one to freedom of speech, are real. You can support the cause by becoming an Insider and help free the speech that can make a difference.

*No video of Richard Poplak auditioning for SA’s Got Talent actually exists. Unless it does and we don’t know about it please send it through.


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