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.

Yours sincerely,

[clients of each of the major SA asset managers]