Seven years have passed since the Paris Agreement was adopted — when a line in the sand was drawn that should have indicated a real beginning to serious, concerted action on climate change. Yet most financial institutions continue to invest and provide financing for the world biggest polluting industry - fossil fuels.
And while there are many ways we can fight for climate justice and live our values, how we choose to spend, use and invest our money is a probably one of our most powerful tools for change.
Read on to learn some of the ways your money could be supporting fossil fuels, and how you can start investing in renewable energies and create positive climate impact.
Some of the ways your cash could be supporting fossil fuels
In 2022 the Australian Superannuation industry was worth a whopping $3.3 trillion dollars. It’s a huge industry with massive influence over how our economies shift and grow. So while you might be spending your time avoiding single use plastic and sorting out the recycling, your hard earned money could be invested in coal via your Superfund. Looking into your existing Superfund and there current policies on fossil fuel investments is a great first step. You can use this tool from Responbile Returns to find some Superfunds that align with your values. But, don’t forget to do your own research into the company, as a recent report from the Guardian
found Australian Superfunds were guilty of greenwashing by including fossil fuel investments in their ‘sustainable’ portfolio options. Yikes
Since 2016, 35 banks have invested $2.5 trillion into fossil fuels, in fact between January and June 2020, globally we saw the highest level of fossil fuel financing since the adoption of the Paris Agreement. Painting a clear and sombering picture that most banks aren’t taking their commitment to net-zero seriously. In Australia alone between 2016 - 2020 the top four banks (ANZ, Westpac, Commonwealth Bank, NAB) supplied over $31 billion dollars in fossil fuel financing, with ANZ contributing 48% of that alone! So where does your bank stand? It can be tricky to get a full and accurate picture but this table can be a great place to start.
You can also research your banks sustainability practices or get in touch and ask where they stand on fossil fuel lending.
Another way our money could be inadvertently fundng the climate crisis is through your investment choices. Whether you invest directly in companies, through a fund or an ETF, make sure you do your own research - even into the companies and funds claiming an ESG (environmental, social and governance) focus. A recent report found that at least two ASX-listed companies were being investigated for their ‘greenwashing claims’ - highlighting that many investment options out there are not true to label. Before investing your money make sure you do the research and look into climate friendly investment options.
How you can start investing in renewable energy and climate impact
Bloom Impact Investing app
Bloom provides a simple and affordable way to invest in over 95 scientifically proven climate solutions, through our easy to use app. Our investment framework is designed around the world’s leading peak bodies on climate science research - Project Drawdown and Climateworks
. Every single asset in our fund not only has to meet our investment philosophy/ framework but also has to be approved by our Investment Committe - which includes some of Australias’ brightest Climate Impact Investors. You can see a full list of Bloom’s investments here.
For those who want to purchase a ‘basket’ of assets - ETFs (exchange traded funds) can be a good place to start. However finding ETFs that align well with your values can require a bit digging - particularly as there is no universally accepted criteria for ESG investing. Finder.com has compiled a great list of some of Australias most popular ESG focused ETFs.
Impact Investing Managed Fund (wealth investors)
A third avenue you can explore for investing in renewable energy/ climate impact is impact investing managed funds. These are funds built to deliver a positive impact and are put together and actively managed by a group of investors. However these funds often only accept institutional investors - i.e individuals with a certain level of wealth. These funds often require a minimum investment of $50,000 or $2M in net wealth. If this is an avenue you can explore Social Ventures Australia could be a good place to start.
The opportunities of investing in renewable energy
Australia has the opportunity to become a renewable energy superpower in the next decade by replacing coal, gas and uranium exports with renewable energy.
Australia has been heavily reliant on fossil fuels as our main source of energy for decades. Between 1994 - 2010 coal and natural gas fuelled 90% of Australia’s energy consumption. However since 2010 use of renewable energy sources has increased. In 2020 the fossil fuel industry saw it’s biggest disruption, with renewables contributed to 24% of total electricity generation in Australia. Demonstrating the accelerated uptake of this form of energy.
As we look towards 2023 and beyond Australia will be facing significant challenges to meet supply and demand if we don’t start to rapidly move towards renewable energy sources. The 2022 National Energy Market Statement of Opportunities said “On the supply side, the reliability of the thermal (coal and gas) generation fleet stayed at historically poor levels in 2021-22, and plant operators have advised that overall plant reliability is unlikely to materially improve in 2022-23”.
What does the future look like for the Australian energy sector?
Australia has a lot to gain by moving our electricity grid over to renewable sources. If we moved 90% Australia’s energy system to renewable sources by 2040, 15B would be added to the GDP and would enable increased spending by Australians of $11B. So moving over to renewable energy sources doesn’t just make environmental sense, it makes economic sense as well.
With 2050 being only 28 years away, Australia has the challenge of rapidly overhaulling and upgrading our energy systems. Presenting significant opportunities to investors who ride the windtails of this industry makeover early.
To learn more about Australias clean energy transition, and how you can benefit, visit the Bloom website for more information.
The information on this blog is prepared by Bloom Impact Investment Services Pty Ltd (ACN 651 965 098 AR 001294778), who is an authorised representative of Cache Investment Management Pty Ltd (ACN 624 306 430 AFSL 514 360) (Cache). All information is general information only and does not take into account your personal circumstances, financial situation or needs. The financial products described herein will be issued by Melbourne Securities Corporation Limited (ACN 160 326 545 AFSL 428 289), as disclosed in the relevant PDS. You should also read the TMD which describes who the financial products mentioned herein, may be appropriate for. All information is general information only and does not consider your personal circumstances, financial situation or needs. Before making a financial decision, you should read the PDS and consider whether the product is right for you and whether you should obtain advice from a professional financial adviser.