Former National Director of GetUp Simon Sheikh has turned social entrepreneur, this week launching Australia’s first fossil fuel free superannuation company as the fossil fuel divestment movement continues to build momentum.

Sheikh has put together a formidable team of finance heavyweights to create Future Super, the first superannuation fund in Australia to completely exclude fossil fuels, including coal seam gas, from its investment portfolio.

“For the first time, Future Super provides Australians with the opportunity to take one of the most powerful actions in fighting climate change, by ensuring their super is not contributing to the problem and instead forms part of the solution,” Mr Sheikh said.

“The idea for Future Super stemmed from conversations with the many Australians who are increasingly frustrated by our government’s inaction on climate change. Future Super was created to give those Australians the opportunity to put their savings to work as part of the solution rather than contributing to the problem.”

According to research released by The Australia Institute last year, one in four Australians are willing to shift their superannuation into a fund that doesn’t invest in coal and coal seam gas. This represents up to $247 billion dollars that could be moved away from fossil fuels.

“With the Great Barrier Reef and other precious places facing unprecedented threats from fossil fuel projects, there has never been a more important time to take action together.”

“Together we have the power to disrupt business as usual – to send a message to the big end of town that they must take climate risks seriously when they’re managing our money.”

The first simulation comparing performance of an Australian fossil fuel free investment portfolio with an indexed ASX portfolio was conducted by The Australia Institute in March 2014 and found similar risk return characteristics as the index.

The Australia Institute concluded in their report that: “A screen eliminating companies whose business model is dominated by fossil fuels can readily be conducted, reducing unburnable carbon risk without compromising returns”.[1]

The leadership team of Future Super combines progressive campaigners with leading finance experts, including Jemma Green, a former Vice President of JP Morgan and an adviser to the global research group Carbon Tracker and James Their, founder of Australian Ethical Investment and the Responsible Investment Association of Australia.

“Future Super gives Australians the option to move their superannuation savings away from fossil fuels and into socially responsible investments, to help build a world worth retiring in. We’re committed to providing strong returns to our members, while building a better future by seeking out exceptional, ethical investments,” Mr Sheikh said.

“Up until now, Australians have not had the option to join a super company that does not invest in fossil fuels. Even funds that are marketed as ‘ethical’ or ‘sustainable’ are still investing in coal and coal seam gas.”

As major global economies move toward action on climate change, fossil fuels are increasingly being seen as a risky investment class.

Financial analysts are warning of the substantial risk to investors holding shares in fossil fuel exposed companies. HSBC has warned companies such as BP and Shell that they could lose 60% of their value if the international community delivers on its agreed emissions reduction targets. Heads of the IMF, OECD and World Bank have all highlighted the significant risk of large levels of global stranded assets.

“Fossil fuel valuations are at risk from the rapidly declining cost of renewable energy and global regulatory efforts to reduce carbon emissions. These are increasingly relevant considerations as we see major countries including the US and China move to regulating carbon pollution,” Mr Sheikh said.

“Every day the money in our superannuation helps decide if funding goes to fossil fuel projects or climate change solutions.

Future Super supports members to align their superannuation investment with their values and desire for a fossil fuel free future,” Mr Sheikh said.

The Fossil Fuel Divestment Movement in Australia – A Select Timeline

November 2012: Following publication of his Rolling Stone article, “Global Warming’s Terrifying New Math”, Bill McKibben and toured Australia.

May 2014: HSBC and Deustche Bank ruled out funding the expansion of Abbot Point coal terminal, Queensland, which would become the world’s largest coal port.

7 June 2014:Bendigo and Adelaide Bank asserted: “the bankdoes not lend to companies for whom the core ­activity is the exploration, mining, manufacture or export of thermal coal or coal seam gas.”

July 2014: The Anglican Church of Australia passed a motion at its General Synod encouraging churches across the country to divest from fossil fuels.

25 August 2014:  The University of Sydney became the first institution of its type in Australia to halt further investments in coal mining.

29 August 2014: The Uniting Church in Australia Assembly resolved to divest from investments in corporations engaged in the extraction of fossil fuels.

1 September 2014: UniSuper launched two new Socially Responsible options that over the next few months will be screening out many of the companies involved in fossil fuel exploration and production that they previously invested in.

2 September 2014: Launch of Super Switch, a website detailing the fossil fuel exposure of 35 of the biggest super funds in Australia.

Major International Developments in Divestment:

April 2014: The world’s biggest fund manager (Blackrock) and a leading financial index group (FTSE) teamed up to create a public index specifically excluding fossil fuel related investments.

May 2014: The University of Stanford announced it will not make direct investments in coal mining companies.

25 June 2014: The British Medical Association became the first health organisation in the world to vote to end its investments in fossil fuel companies.

[1] Source: Climate proofing your investments: moving funds out of fossil fuels, The Australia Institute, 5th March 2014