Submission to the Finance and Expenditure Select Committee on the
Inquiry into Climate Adaptation
Dr Robert Howell
This Submission contains 10 Sections, a List of Recommendations and an Appendix.
1 Introduction and Summary
2 List of recommendations
3 Include Mitigation and Preventive Actions
4 Include Biodiversity and The Human Right to a Clean, Healthy and Sustainable Environment
5 The Pace of Ecological Deterioration and Aotearoa New Zealand’s Minimal Response
6 Economic Consequences
7 Examples of Conceptual Frameworks Affecting Responses to Disasters
8 Conceptual Frameworks and Values
9 Defining Basic Human Needs
10 The Financial Sector and Ethical Investment
11 Personal Background
Appendix 1: Ethical Investment
1 Introduction and Summary
The major concerns expressed in this submission are
the rapid pace of ecological deterioration;
the risks to our current social fabric and economy brought about by this deterioration;
the need to identify the conceptual frameworks and their values used in describing the causes of and responses to severe weather events;
the need to identify the basic requirements for life in Aotearoa New Zealand;
the needed reform of our emergency management and financial institutions.
The risks of ecological degradation and severe weather events are rapidly increasing in frequency and intensity. Aotearoa New Zealand’s plans at mitigation and adaptation significantly revolve around buying climate offsets. This strategy is expensive and likely to be unsuccessful because many developed countries also include buying offsets in their strategies. Instead of relying on other countries to make the changes from an economy and lifestyle that is not sustainable or in accord with modern science, Aotearoa New Zealand needs to make the changes itself. It should prepare for changing to ways of living and an economy in keeping with resource use that does not damage or destroy the Earth , and prepare for a world where severe weather events are the norm.
How Aotearoa New Zealand will respond to this challenge depends on the conceptual / ideological frameworks and the values underlying those frameworks. There are basically two choices.
a) The first choice is to rely on a libertarian philosophy, or variants of it, that posits liberty as its paramount ethic, with the importance of a small role for the state and a large one for the market. This first choice ignores the reliance humans have on the earth’s ecological systems. It fails to recognise the failure of the market to date to deal with ecological degradation, and in particular, the role of the fossil fuel and chemical industries, that have not been transparent and responsible. The Earth’s systems are now under such threat through selfish exploitation that continued human life on earth is in serious doubt.
b) The second choice is a philosophy where the primary ethic is caring for both people and the planet. Caring for people is based on the notion of fairness, where everyone has the right to life and security, and access to the basic conditions for the means to live including accommodation, food, water, health and education services. Caring for the planet involves respect and reciprocity with the natural world, a recognition that we are dependent on the non-human world for life, a principle of guardianship of that natural world, so that humans can live in a clean, healthy and sustainable world.
The implications of these value choices are illustrated with ways of responding to disasters (Section 7), and the investments, direct and indirect, of the finance industry in fossil fuels (Section 10).
2 List of Recommendations
R1 That any plans for adaptation should also include plans for mitigating. Aiming for prevention is preferable to having to adapt in the future to the consequences of severe weather events.
R2 Aotearoa New Zealand should ratify the UN Convention on Biological Diversity, and The Human Right to a Clean, Healthy and Sustainable Environment, and take steps to implement these conventions.
R3 That because the ecological deterioration caused by climate warming and biodiversity loss is happening at a faster pace than recognised in COP agreements, current targets for reducing emission by 2050 are out of date. Any existing government and commercial plans identifying targets for carbon reduction or neutrality by 2050 (such as the Enduring Letter of Expectations to Crown Financial Institutions in relation to Responsible Investment) should have targets of 2030. Government needs to factor into its planning and budgets the financial obligations it has regarding emission reductions.
R4 That Government factor into its planning and budgets the results of studies dealing with the future economic drop in income due to ecological deterioration and destruction.
R5 That Aotearoa New Zealand’s Emergency Management organisational design, funding, policies and practice ensure effective government employment, control and accountability over the organisation, including at grass-roots levels, and that it is properly funded, and its risk analysis includes ecological deterioration.
R6 That mitigation and adaptation plans and policies are made using the principles of fairness, and living within the capacity of the earth to support human life, as their foundation.
R7 That because environment and social policies need to be coordinated, a Minimum Income Standard be established for Aotearoa New Zealand that is based on safe environment standards, and that transition plans be prepared for all New Zealanders, with priority given to the most affected sectors, such as agriculture, transport, tourism, construction, and the energy sectors.
R8 That the financial sector adopt validated principles and standards that respect and care for both people and the planet. That they change their investments according to these principles, and in particular, divest from direct or indirect investment in fossil fuels.
3 Include Mitigation and Preventive Actions
Any adaptation efforts should also include mitigation. Mitigation includes dealing with the causes of the problem in the first place. It makes no sense in planning how to adapt to a deteriorating environment, if efforts at the same time are not made to also address the causes. Prevention if possible is better and cheaper that having to adapt.
Having said that, I do not see the international world economy significantly reducing its dependency on fossil fuels in time to avoid major damage. I do not see the oil and gas producing countries and companies leaving oil and gas in the ground.
The logic of the policy of promoting further exploration and production of fossil fuels to earn income but increase emissions, in order to have money to reduce emissions, escapes me. Expanding exploration and production to meet short term demand just shortens the time when adaptation and urgent interventions are necessary.
Recommendation R1
That any plans for adaptation should also include plans for mitigating. Aiming for prevention is preferable to having to adapt in the future to the consequences of severe weather events.
4 Include Biodiversity and The Human Right to a Clean, Healthy and Sustainable Environment.
In 2022 the Conference of the Parties (COP15) to the UN Convention on Biological Diversity was held in Montreal, Canada. This led to the international agreement (supported by Aotearoa New Zealand) to protect 30% of land and oceans by 2030 (30 by 30) and the adoption of the Kunming-Montreal Global Biodiversity Framework. Biodiversity refers to the variety of living species on Earth, including plants, animals, bacteria, and fungi. The five major drivers of loss of biodiversity are invasive species; changes in land and sea use; climate change; pollution; direct exploitation of natural resources. The framework also reflects an understanding that climate change and biodiversity loss are inextricably linked and must be addressed together.
On July 28, 2022 the UN General Assembly declared that it is human right to a clean, healthy and sustainable environment. The substantive elements include clean air; a safe and stable climate; access to safe water and adequate sanitation; healthy and sustainably produced food; non-toxic environments in which to live, work, study and play; and healthy biodiversity and ecosystems. There were 161 votes in favour, no votes against, and 8 abstentions. Prior to the July 2022 vote, the right to a healthy environment was legally recognised in more than 80% of UN Member States (156 out of 193 States). While Aotearoa New Zealand supported the July 2022 vote, it has not yet ratified this right.
Recommendation R2
Aotearoa New Zealand should ratify the UN Convention on Biological Diversity, and The Human Right to a Clean, Healthy and Sustainable Environment, and take steps to implement these conventions.
5 The Pace of Ecological Deterioration and Aotearoa New Zealand’s Minimal Response
The Briefing to the Incoming Minister for Emergency Management and Recovery states that severe weather events, exacerbated by climate change, are the new normal. The Ministry for the Environment states that scientists globally agree that climate change is increasing the frequency and intensity of extreme weather events, and that those impacts will continue to worsen in the future.
The previous Labour Government set up a Zero Carbon Act. Aotearoa New Zealand’s First Emission Reduction Plan and Aotearoa New Zealand’s First Adaptation Plan followed in May and August 2022 respectively. Climate Action Tracker (CAT) provided an assessment of Highly Insufficient to these efforts to date. One of the reasons for this is ineffectiveness of the Emissions Trading Scheme. Another is the heavy reliance on the proportion of its target through buying international offsets. The plan to reduce emissions using offsets will be very expensive, made worse by increasing demand, and likely unsuccessful. None of these costs are factored into current budgets.
The second major problem with the Zero Carbon Act and Plans is the date for the accomplishment of the reduction of emissions – 2050. This timeline does not consider that the world is likely to reach 1.5 much earlier. James Hansen et al have stated: under the current geopolitical approach to GHG emissions, global warming will likely pierce the 1.5°C ceiling in the 2020s and 2°C before 2050. Not all his scientific colleagues share this evaluation, but Hansen has a long history of scientific work with an impeccable record. Regardless of the accuracy of the predictions, actual events are showing widespread severe weather events with ecological systems being destroyed much faster. Shrinking ice cover at both Poles, and the increase in forest fires in Canada, are but two examples. Watch the daily news for more examples. Copernicus, an EU Climate Change Service, has stated that 2023 was the warmest year on record, close to 1.5°C above pre-industrial level.
According to Accenture, a consultancy, around one-third of the world’s 2,000 biggest firms by revenue now have publicly stated net-zero goals. Of those, however, 93% have no chance of achieving their targets without doing much more than they are now. Few businesses lay out credible investment plans or specify milestones against which progress can be judged.
My assessment is that we will reach 1.5 during the next decade, and sooner rather than later, and we cannot avoid many of the impacts of increased severity and prevalence of extreme weather events.
Recommendation R3
That because the ecological deterioration caused by climate warming and biodiversity loss is happening at a faster pace than recognised in COP agreements, current targets for reducing emission by 2050 are out of date. Any existing government and commercial plans identifying targets for carbon reduction or neutrality by 2050 (such as the Enduring Letter of Expectations to Crown Financial Institutions in relation to Responsible Investment) should have targets of 2030. Government needs to factor into its planning and budgets the financial obligations it has regarding emission reductions.
6 Economic Consequences
A recent report from Germany researchers centred on Potsdam Institute for Climate Impact Research; Potsdam University; and Mercator Research Institute on Global Commons and Climate Change. The report stated economic damage will mean that average incomes will fall by almost a fifth within the next 26 years compared with what they would have been if there was no such crisis. The costs of damage will be six times higher than the price of limiting global heating to 20C. This study did not incorporate a number of impacts including heatwaves, sea level rises, tropical cyclones, damage to natural ecosystems and human health, and tipping points (the critical point in a situation, process, or system beyond which a significant and often unstoppable effect or change takes place). So the economic figures are likely to get worse. This is but one of a growing number of studies indicating the considerable difficulties the international economy will face in the near future, with major adverse consequences for the Aotearoa New Zealand economy.
Any funds set up to financially assist New Zealanders whose homes and livelihoods are destroyed or damaged by severe weather events, are unlikely to be big enough to cover the frequency and severity of extreme weather events that we will experience during the next few decades.
Recommendation R4
That Government factor into its planning and budgets the results of studies dealing with the future economic drop in income due to ecological deterioration and destruction.
7 Examples of Conceptual Frameworks Effecting Responses to Disasters
Jon Coaffee starts his book Future Proof: How to Build Resilience in an Uncertain World, by reflecting on the story of the Japanese earthquake in 2011. The essential failings in the response to the events were shaped by ingrained conventions of a centralised governance culture where ‘official’ narratives of risk management remained unquestioned. … The authorities had not anticipated such a large earthquake hitting the eastern seaboard. …The higher than predicted impacts contributed to the confusion that followed as a mixture of poor communication and mishandled evacuation procedures resulted in significant damage and loss of life.
In commenting on the Chernobyl nuclear power plant accident in Ukraine in 1986, Coaffee states This essentially human-induced catastrophe … revealed the dangerous extent to which society was at the mercy of centralized institutions and the mass media for information about dangers and risk.
In 2018 a long bridge spanning a viaduct collapsed in Genoa, Italy. This was due to maladaptive construction, poor maintenance and an unwillingness to act on warnings. Retrofitting needed to deal with corrosion but was held up by bureaucracy, a lack of budget at the national Ministry of Infrastructure and the privatization of much of Italy’s transport infrastructure. Corruption and organised crime also contributed to holding up essential maintenance.
The fourth example deals with the 1998 electricity cable failure in Auckland. Power cables were past their replacement date. Although work had commenced on new cables, no plans had been made for covering supply until these came into effect. When one of the existing cables failed, extra stress was placed on the others causing further failures. This was both a breakdown of contingency planning and poor cable maintenance. Many also saw this inattention to the condition of the infrastructure as a result of the recent deregulation of New Zealand’s electricity sector. … As we saw in Auckland, and more recently in Genoa, such splintering of responsibility not only makes a collective response to disruption far more complicated, and in many cases impossible, it can also lead to inequitable and ethically dubious practices taking hold.
Another Aotearoa New Zealand example can be added - the leaky home crisis where regulations were treated as red tape. This concerned timber-framed homes built from 1988 to 2004 that were not fully weather-tight because of a change in the building code, the elimination of building apprentice schemes, and the closure of government-run technical training bodies resulting in significant de-skilling of builders. The consequences often included the decay of timber framing which, in extreme cases, made buildings structurally unsound. The saga has been labelled Aotearoa New Zealand's largest man-made disaster. One report put the number of homes with issues at a conservative 174,000, at a cost to the country of around $47 billion.
There is now a recognition in the light of recent severe weather events, that Emergency Management (Civil Defence) needs to be considerably overhauled. It is critical that this overhaul take into account the lessons identified by Coafee.
Recommendation R5
That Aotearoa New Zealand’s Emergency Management organisational design, funding, policies and practice ensure effective government employment, control and accountability over the organisation, including at grass-roots levels, and that it is properly funded, and its risk analysis includes ecological deterioration.
8 Conceptual Frameworks and Values
For the last forty or so years, Aotearoa New Zealand has wavered between a libertarian ideology that favours markets over government in the supply and regulation of goods and services, and governments that have attempted to address environment threats within a Business-As-Usual economic framework.
There is considerable literature about the conflict with science (the entropy laws of thermodynamics) and ethics (promotion of self-interest and exploitation of the environment) with a libertarian ideology, and its variants. This ideology chooses liberty as the paramount ethic, with the importance of a small role for the state and a large one for the market. If the market is left unregulated, monopolies arise for price setting opportunities, and externalities (eg costs not included in the price, such as pollution) are paid for by the state. The market is unable to deal with ecological deterioration. Nicholas Stern has said: climate change is a result of the greatest market failure the world has seen.
The ethics of a market approach are illustrated by the privatisation of Telecom. The result was a significant loss to the company’s assets, and to the considerable enrichment of overseas owners (Bell Atlantic and Ameritech) and local bankers and advisors (Fay, Richwhite, Gibbs and Farmer). Brian Gaynor calls it a "me first" concept. This is where the interests of the major controlling shareholder, who usually has a short-term horizon, are given priority. Under this approach a company is heavily reliant on debt, has a high dividend payout policy, large directors' fees, generous golden handshakes, and a strong emphasis on capital repayments. Other stakeholders and the common good are ignored.
When we have an economy based on greed, the result is wealthy elites who are the world’s top 1% of emitters produce over 1000 times more CO2 than the bottom 1%. Many wealthy people have prepared bolt holes from the ecological and economic destruction that they see coming (and are substantially responsible for). A libertarian philosophy and its variants do not include a fairness principle, nor an environment ethic, and hence favours the rich over others in the population. It particularly disadvantages the poor.
Recommendation R6
That mitigation and adaptation plans and policies are made using the principles of fairness, and living within the capacity of the earth to support human life, as their foundation.
9 Defining Basic Human Needs
Nicholas Stern dismissed any significant relationship between environmental and social policy, by saying that there is little point in equitable access to a train wreck. Gough in his book, Heat, Greed and Human Need disagrees. He states that equity, redistribution and prioritising human needs, far from being diversions from the basic task of decarbonising the economy, are critical climate policies. The move to a green economy can only be successful if environmental and social policies (eco-social policies, defined as policies that pursue both equity/justice and sustainability/sufficiency goals) are integrated.
In discussing basic human needs, Gough describes the UK Minimum Income Standard study: twelve focus groups were tasked with producing lists of items that households would need to reach an acceptable minimum standard of living. If the whole of the UK were living on a decent life budget on current standards, there would be a likely drop of 37% of consumption based emissions. This shows that there are significant gains to be made without depriving people of the ability to live within current patterns of consumption. Studies in Finland and some evidence from Sweden replicate similar findings. In the UK the critical basic goods of home, energy and food (together equaling about 40%) are carbon intensive. The studies also show that current patterns of consumption are still not able to enable living within the capacity of the Earth to support human life.
Recommendation R7
That because environment and social policies need to be coordinated, a Minimum Income Standard be established for Aotearoa New Zealand that is based on safe environment standards, and that transition plans be prepared for all New Zealanders, with priority given to the most effected sectors, such as agriculture, transport, tourism, construction, and the energy sectors.
10 The Financial Sector and Ethical Investment
A considerable portion of the world’s investments are unethical in that they have inadequate regard for the welfare of people and/or the planet. They invest in companies that abuse workers’ or other stakeholders rights. Their activities destroy our environment. Very few companies are fully fossil-free, or operate within ecological boundaries. This includes Aotearoa New Zealand’s Crown Financial Institutions, KiwiSaver Funds, and the main Aotearoa New Zealand banks.
BankTrack has reported on bank investment in fossil fuels between 2016 and 2023. JP Morgan Chase headed the list with $430 bn. In 2022, New Zealand Superannuation Fund reported that it has shifted about 40% of its overall investment portfolio to market indices that align with the Paris Agreement, the international climate change treaty. Unfortunately, how it claimed to achieve this is the MSCI World Climate Paris Aligned Index. The top ten Constituents in that Fund included JP Morgan Chase.
The top four Aotearoa New Zealand banks invested a total of $68 bn between 2016 and 2023. ANZ invested $25 bn; CBA - $17 bn; NAB - $16 bn; Westpac – $10 bn. In significant part this is because of the failure to require validated definitions and standards of what is ethical. This issue is expanded in Appendix 1.
Recommendation R8
That the financial sector adopt validated principles and standards that respect and care for both people and the planet. That they change their investments according to these principles, and in particular, divest from direct or indirect investment in fossil fuels.
11 Personal Background
I have a MA in Philosophy and a PhD in Health Management and Planning. My career included experience as a university teacher, management consultant, CEO of my own business, a local authority, and an NGO concerned with ethical investment. My teaching and consulting included business strategy, business ethics, and governance. The skills I bring are strategic thinking linking the environment, economics and ethics, with particular expertise in strategy, ethical investment, and ethics.
Appendix 1
Ethical Investment
In the 1970’s and 1980’s opposition to apartheid, the Vietnam war, and a concern about the environment, led many investors to act on their beliefs. A number of funds gradually started to develop ethical criteria. During that process, ethical investing was relabelled to eventually include the terms socially responsible investing; environmentally responsible investing; responsible investing; Environmental, Social, and Governance (ESG) investing; sustainable investing; values-based investing, impact investing, green investing; best-in-class investing; norms-based investing. The Responsible Investment of Australasia (RIAA) stated that the responsible investment sector is hugely diverse and ethical investment cannot be defined. The establishment of the six principles of the United Nations Principles of Responsible Investment added to this confusion by not defining what responsible means. The ineffectiveness of this was recognised by one of the Co-Chairs of the Expert Group that drafted the United Nations Principles of Responsible Investment, who stated that the Responsible Investment community has not been more responsible than the investment community generally.
(T)he trillions of dollars controlled by RI asset owners, managers and consultants are not deployed consistent with long term investment strategies that would conduct our economies in a direction consistent with sustainable development, environmental protection, and greater economic justice – which would imply radical departures from what the market feels comfortable with and the valuation it puts on the large cap listed shares that dominate most global portfolios.
The Reporting Exchange is an organisation that helps corporations disclose sustainability data, and tracks various ESG-related guidelines, such as regulations and standards. It reported that across the world the number grew from around 700 in 2009 to more than 1,700 in 2019. That includes more than 360 different ESG accounting standards.
In 2021, Wise Response sent an Open Letter on the Ethics of Investment to the Prime Minister. The Letter identified five major problems:
▪ the values that guide the funds are usually not sufficiently comprehensive or wide-ranging to cover the social and environmental relationships in the ethical domain;
▪ the dominant international ESG framework (Environment, Social and Governance) is relatively weak, and often acts as a smokescreen for Business-As-Usual;
▪ the application of these so-called ethical frameworks is often flawed and far from transparent;
▪ the portfolios of all the KiwiSaver funds and the NZSF we reviewed contain banks listed among the 60 banks that invested a total of $3.8 trillion into fossil fuels from 2016–2020;
▪ the engagement and reporting practices of these funds are inadequate and lack transparency.
The Letter was referred eventually to the Financial Markets Authority who replied that nothing could be done because values are subjective and constantly changing, a reply that should be a cause for concern about the competency of an important agency of Government.
Table: NZSF Inclusions and Norwegian Council of Ethics Exclusions 2018
Labour Rights - Walmart
Severe Environmental Damage - Bharat Heavy Electricals
Coal fired discharges - Duke Energy
Palm oil plantations - IJM Corp -
Bribery and corruption in 18 countries - ZTE Corp
Phosphate from Sahara - Potash Corp Saskatchewan
NZSF Inclusions and Norwegian Council of Ethics Exclusions 2020
Nuclear Weapons - Aerojet Rocketdyne; Airbus SE
Coal/coal based energy - AGL Energy
Severe Environmental Damage - ELSewdy Electric - (hydropower project in Tanzania); Genting Bhd (Palm oil)
Serious Violation of Individual Rights in Situations of War or Conflict - Shapir Engineering
Human rights – Page: textile production in India.
In the same year (2021) the Ministers of Finance and the ACC issued an Enduring Letter of Expectations to Crown Financial Institutions in Relation to Responsible Investment. In a footnote it stated that For the purpose of this letter the terms ‘ethical investment’ and ‘responsible investment’ are interchangeable. Responsible remains undefined in the letter and by the NZSF and the NZSF continues to invest in unethical companies. This is shown by comparing companies that Norwegian Council of Ethics has excluded, but the NZSF has included in its investment portfolios (See Table).
In addition, in the five years since the Paris Agreement the NZSF has invested significantly in at least seven banks which have invested in fossil fuel companies even though they are primary drivers of climate heating. These include Citi, Wells Fargo, Morgan Stanley, Barclays, HSBC, Bank of China, and Agricultural Bank of China.
The NZSF in 2022 stated that responsibility is to be replaced by the notion of sustainable investment, on the grounds that this is the global direction of travel. The difficulty with the notion of sustainability is that there are weak and strong definitions. One meaning is to endure, to avoid the depletion of natural resources in order to maintain an existing ecological situation or balance. An ecological status quo or balance is inconsistent with the idea of evolution – change is inevitable. The goal is to ensure that any changes enable humans to continue to live. A weak definition does not recognise that the Earth is a closed system except for sunlight received, heat reflected into space, and external gravitational effects, and hence is based on unscientific premises. (This weak premise underlines the modern international economic system.) Hence it does not pass the content validity test.
In September 2022, NZSF reported that it has shifted about 40% of its overall investment portfolio to market indices that align with the Paris Agreement, the international climate change treaty. Unfortunately, how it claimed to achieve this is the MSCI World Climate Paris Aligned Index. The top ten Constituents includes JP Morgan Chase, which is the main investor in fossil fuels as identified by BankTrack. It should be noted that in 2016 the NZSF divested its direct investments in fossil fuels, but for strategic reasons, not on ethical principles.
The basic problem with the NZSF legislation is that their primary obligation is to invest on a prudent commercial basis in a manner that maximises returns and avoids prejudice to New Zealand’s reputation. The phrase ‘avoiding prejudice to New Zealand’s reputation’ is so ineffective, that it needs to be changed to specify obligations to care for people and the planet. The legal advice NZSF sought soon after it was set up about smoking said that there was no conflict with its reputation, but the NZSF excluded it anyway. It also excluded Freeport-Moran over its mining in Indonesia. Both exclusions were because of public embarrassment. It should be noted that in 2016 the NZSF divested its direct investments in fossil fuels, but for strategic reasons, not on ethical principles. However, the evidence above showing investments in a range of unethical companies, and the problems with a 2050 target date in the Enduring Letter mean that the basic ethical clauses in the NZSF legislation need to be rewritten.
There are four steps involved in ethical investing:
(1) define one’s values;
(2) exclude from investment where these values are not aligned, except when engagement is the tactical action chosen:
(3) engage with companies to change behaviour; and
(4) report on outcomes.
Step 1 involves choosing values that adequately cover both human-human and human-Earth components (ie validated). Steps 2 and 3 involve choices between what types of investment to exclude and what companies to engage with to try and change behaviour. Step 4 involves reporting on outcomes.
Decisions about the second and third steps are tactical: some funds exclude a lot and others do not, and there is no single right approach. Divestment can lead to significant pressure on companies to change. And divestment is appropriate when a company’s values are in sharp conflict with a country’s values. Aotearoa New Zealand’s opposition to nuclear weapons is a good example. But divestment does not necessarily lead to a better outcome. Selling shares in a company to be bought by others who continue the business may make little difference. An example is where a number of the bigger fossil fuel companies are divesting parts of their activities, but many of these operations are being bought up by private equity or smaller companies in the petrochemical sector who are continuing business-as-usual. (This includes INEOS, a current sponsor of the All Blacks.) Hence it is better to engage with those companies to try and persuade them to change. A good example of a company that changed from a traditional fossil fuel company to a renewable energy company is Ørsted. Divestment in their earlier mode of operation would not have supported their transition. But for companies that refuse to change, unpalatable options remain.
Reporting, the fourth step, should enable an investor to know how closely the fund has followed its core value or values. If, for example, a fund has chosen the value of do no harm, then the reporting should clearly inform an investor how the investments in that fund have done no harm, or from actions and engagement whether there has been any change to achieve that aim in the future.
References
A list of References can be obtained by forwarding a request to rhowellnz@gmail.com
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