Do you want your investments to stop financing the fossil fuel industry driving the climate crisis?
Then sign up to our #InvestFossilFree campaign now! We're asking your asset managers to give us all the option of investing fossil-free.
Why you should sign up
Many of us are investing in the biggest agents of climate change – fossil fuel companies – without realising it, through our pensions and investments. At Fossil Free South Africa, we’re trying to change that by building public support for funds free of fossil fuels, and then engaging with asset managers on behalf of the people who want these funds.
Fossil fuel divestment is a global movement calling for people to withdraw money from investments in fossil fuel companies. With over $40 trillion in endowments and portfolios joining in, it challenges the fossil fuel companies that are contributing the most to climate breakdown. Divesting from climate-breaking investments frees up capital for reinvestment in safer, cleaner, and more ethical options. Divestment is hard in South Africa. But we believe showing asset managers there is demand for fossil-free investments can change that. We’re not asking asset managers to divest 100% overnight – just to create more fossil-free options for the many people who now want them. Sign up here.
How can I share this campaign?
COPY & PASTE THE BELOW TEXT & SHARE IT ON A PLATFORM/S OF YOUR CHOICE OR USE OUR SOCIAL SHARE KIT WHICH INCLUDES GRAPHIC AND COPY OPTIONS
I want investments free of the fossil fuel industries driving climate breakdown. That’s why i’ve signed up to the #InvestFossilFree campaign which is building public support for funds free of fossil fuels. Sign up now: bit.ly/invest-fossil-free
#InvestFossilFree Campaign Background
The #InvestFossilFree Campaign aims to build and consolidate public support for fossil-free investment funds by engaging with the clients and decision-makers of leading SA asset managers: Allan Gray, Coronation, Investec, Old Mutual, Sanlam, Stanlib, and the Public Investment Corporation (GEPF).
Some of these asset managers have often told us their clients aren’t interested in this kind of fund. Others haven’t asked. When you sign up, you prove them all wrong. We will then write letters on behalf of you and engage with your asset managers.
What will we do with the letters?
- We will send these letters to the asset managers,
- request constructive meetings, and
- hopefully give you an opportunity to join meetings to engage in constructive face-to-face dialogue
- If they refuse meetings and still don’t act, we will consider actions such as non-violent protests to build public awareness of these issues and draw attention to their irresponsibility.
We have a track record of success – we led the movement to persuade the University of Cape Town to divest.
Dear [top management of leading asset managers] (the names of the relevant individuals will be used when these letters are sent)
Creating a fossil fuel-free investment fund is your urgent responsibility
We write to you as asset owners and clients, with the implicit support of thousands of other South Africans, and call on you to create a substantially decarbonised (‘fossil free’) SA equity fund as soon as possible. As you are no doubt aware, it is now widely acknowledged that climate breakdown is a matter of existential risk for the world at large, and for Africa in particular. The Covid-19 pandemic has further demonstrated the abundant peril of neglecting scientific advice on long-term global risks and ecological breakdown
- Southern Africa has been identified by the IPCC as a climate change ‘hotspot’, warming at TWICE the global average. South Africa’s current national emissions trajectory is consistent with taking the world to 3°C–4°C of warming by 2100—and up to 8°C warming for large parts of South Africa, a level that stands every chance of destroying our economy and society.
- The UN Environment Programme and numerous other calls have been made showing global emissions must fall very fast over the next decade to avoid catastrophic climate breakdown.
- South Africa has in recent years been badly affected by drought, almost certainly worsened by climate change, while the health effects of air pollution from coal, and the corruption and poor governance often associated with fossil fuel extraction and use bring massive additional social and economic costs.
- Climate change is estimated to have cut 10% off SA’s national GDP (from a 1990 baseline).
- The social and health effects of coal burning and mining worsen our nation’s inequality and create “sacrificial zones” within South Africa.
Despite the global consensus of citizens represented by governments ratifying the Paris climate treaty that global warming should be limited to 1.5 degrees, fossil fuel companies, enabled by asset managers and debt issuers, have in many instances still not sought to reduce fossil fuel emissions but have instead accelerated plans for extraction while lobbying against vital regulation.
Since climate change has been clearly identified as a leading global human rights issue, these business plans amount to mass human rights abuses which must be averted and in which we do not want to be complicit.
In a climate emergency, it falls to every individual and institution to take all possible steps within their power to avert this crisis. We no longer, for example, wish to be invested in Sasol, a company that has missed all its own emissions reductions targets, that has no plan or targets for urgent decarbonisation in alignment with science-based targets for which current executive leadership can be held fully accountable, and which repeatedly seeks to avoid vital regulation of carbon dioxide and other emissions. We believe that there are now abundant indications that your current investment and management strategies are damaging portfolio value:
- By undermining the global environment that is the foundation of all economies
- By failing to more actively seek climate-resilient investment opportunities
- By ignoring potential stranding of carbon-intensive assets
- By ignoring the destruction of value in asset classes affected soonest by climate change, e.g., agriculture and insurance
- By allowing the poor governance that is all too often associated with companies that neglect environmental responsibilities to go largely unchallenged
- By ignoring the mounting evidence that rigorous ESG screening can improve returns
We, as your clients, instruct you to make active engagement and leadership on climate issues with asset owners and clients an immediate priority:
- Create and capitalise an SA equity or mixed asset fund with hard screening for the most carbon-intensive SA companies (those listed in the Carbon Underground 200, the Global Coal Exit List and the Carbon Majors list), to give your clients the option of partial or complete divestment from these companies.
- Make alignment with science-based carbon dioxide emission reduction targets by carbon-intensive investee companies a pillar of your ongoing shareholder engagement.
- Provide annual assessments of: 1) stranded asset risk over various timeframes for carbon-intensive assets across your portfolios and 2) the carbon intensity of your non-ESG funds/portfolios.
- Work with other asset managers to make an insistence on science-based national emissions reductions a pillar of public advocacy and engagement with government.
- Communicate regularly and systematically with your client base on issues of ethical and sustainable investment.
We believe these actions to be in the best long-term interests of us as investors, your clients, and society, the broader environment within which our assets operate to create value.
We request a meeting with you within six weeks of receipt of this letter to discuss their urgent implementation.
[clients of each of the major SA asset managers]
Watch our campaign video and view the notes to the video here.
More information and background
Who are we?
We are Fossil Free South Africa, a campaign for fossil fuel divestment and sustainable reinvestment, working to push the fossil fuel industry to clean up its act or close down. Together with students, we helped persuade UCT to divest in 2022. We aim for a just transition for very rapid decarbonisation of our society, via practices and investments that will help secure our human rights, a stable climate and sounder finances.
Divest-invest is a global movement of concerned citizens. Here in SA:
- In 2017 and 2019, we held in-depth workshops with asset managers and retirement funds (asset owners) on divestment.
- In 2018, we ran a social media spotlight campaign which ran alongside our petition to South Africa’s top asset managers, calling on them to provide fossil-fuel-free investments. The campaign highlighted those fighting for a fossil-fuel free future, as well as those most affected by our fossil fuel economy which is causing climate breakdown and violating human rights, and included an advert in the Business Day calling on asset managers to act (but they didn’t).
- In 2019 we started the #InvestFossilFree campaign and started collecting signatures from SA’s top asset manager clients.
- In 2021, we sent a letter to Alan Gray with 115 signatories. Alan Gray refused to create a fossil-free fund. We plan to follow up on this while continuing to collect more signatures and sending letters to other asset managers.
- In 2022, our lead divestment campaign pushed UCT to commit to divestment, and we are now engaging other SA universities.
Frequently Asked Questions
Continued investment in fossil fuels poses the following grave risks to both investors and society at large:
- Continued under-investment in the green economy needed to avert the worst dangerous climate change.
- Continued social licence for an industry that has become very dangerous, exploitative and corrupt.
- Continued decline or crippling of the South African economy by the negative external effects of fossil fuels: climate breakdown, missed development opportunities, economic volatility, deadly air pollution, excessive water use, continued corruption, poor governance (strongly associated with these industries) and global (the fossil-fueled Ukraine war) and regional conflict (the insurgency in Mozambique).
- Loss of returns on investments due to these factors (asset stranding).
- Missed opportunities for investments in the green economy.
Possible sharp loss of capital in a carbon bubble scenario.
- Fund managers are the financial specialists who decide how most of the money you save in your retirement fund or unit trust is actually invested: e.g., how much of it goes offshore, how much is invested in bonds, how much in property, how much in which companies.
- Fund managers have enormous power in society. As one SA asset manager says, asset managers “decide how the valuable savings or resources of a population are allocated for growth and development”. But at the moment, South Africa’s asset managers have effectively allocated many of our resources not for a thriving economy and healthy environment, but for a crippled economy and devastated environment. They didn’t do this maliciously or deliberately. But they’re still applying the investment logic of the 1960s when the evidence is now overwhelming that this is a recipe for disaster. Many of them are very concerned about climate themselves, but say they need you, the asset owners, to first start noisily demanding this kind of change so they can beat institutional inertia.
- None of them, to our knowledge and despite their purported concern over climate change, have meaningfully educated or canvassed their clients on the issue.
- Overseas fund managers do already offer many fossil-free investment options. They’re easy to find if you live in the US, UK, Europe or Australia. The world’s biggest asset manager, Black Rock, has also to some degree made addressing climate change a priority. But there are still no fossil fuel-free options for ethical and responsible South African investors. We have to change this. In the long term, all investment should be responsible (or better regulated).
- So-called ESG investment can be helpful, but can also be a mass smokescreen for inaction and greenwashing. We like ESG mostly only when it leads to outright exclusion of the worst permitters.
South Africa’s biggest asset managers collectively manage over R2.7 trillion. Over 10 million South Africans participate in various forms of collective investment via savings, retirement funds and unit trusts. Even more are connected to financial services. This represents enormous potential power for creative change, if even a small proportion of this capital is redirected towards truly environmentally and socially responsible investment.
Of course. You have standing wherever you have money invested.
We’re still some way from seeing actual fossil-free funds created. It’s possible you may get lower returns, but there are many good reasons to think that fossil-free funds in South Africa can get acceptable or even improved returns. The two substantially fossil-free funds that we are aware of are delivering acceptable performance. Divesting will help protect you against stranded assets and the sharp loss of returns threatened by a possible carbon bubble.
Yes, we’re all still dependent on them. But we have to phase them out very fast, in favour of reduced energy demand and renewable energy sources such as wind and solar. We’re NOT asking that all fossil fuel companies shut down overnight, just that they start cutting their emissions at the speed that scientists have figured out is needed to keep average global warming below 1.5C; that is, at least 7.6% emissions reductions annually. Unfortunately, despite their claims, few if any are doing so.
Your asset manager has had 30 years (since the UN Framework Convention on Climate Change was signed, marking the establishment of a global consensus on climate change), to push investee companies to responsibly manage emissions. But most of them have only belatedly started engaging on climate issues in the past two years. None of them are yet insisting that investee companies meet scientific targets for emissions reductions.
When your asset manager tells you they need to be invested in fossil fuel companies to secure changes in those company’s practices, ask them for the evidence that their engagement is working. Ask them for examples of when, where and how their shareholder advocacy has secured actual, measurable and sustained emissions cuts. Shareholder engagement can indeed be effective with some companies on some issues. But there is very little evidence that it is effective in persuading fossil fuel companies to change their core business models. This may be because while it was once possible to argue that these companies served the public good, that time has long since passed.
Fossil fuel company executives who are not setting ambitious emissions reductions targets should be prosecuted for environmental crimes, not treated as respectable corporate citizens as shareholder engagement implies. In 2020, after years of mounting evidence of the climate crisis, these executives would not hold these positions if they had any interest in the social good.
Lastly, divestment does not preclude continued shareholder engagement. Asset managers can partially divest and continue to engage while threatening further divestment if targets are not met. We ourselves own one share each in the coal companies Exxaro and Thungela so that we can support shareholder advocacy led by Just Share.
Unfortunately, in our experience, asset managers only begin to become champions of shareholder engagement when pressured to divest. But it’s dishonest and evasive to use shareholder advocacy as a figleaf for inaction in a global climate crisis.
We’re not saying the asset managers should immediately sell off all their Sasol shares if they and most of their clients don’t want to. We’re just saying they should make it possibly for those of us who do want to divest, to do so more easily.
We think any credible fossil fuel-free fund also needs to exclude destructive industries such as tobacco, armaments and intensive meat production; and that all investable companies should be screened to ensure they score well for their environmental, social and governance (ESG) practices.