17 reasons why boards must dig deeper when divesting from fossil fuels
Divesting from fossil fuels is significantly important for all company boards and executives to discuss, consider and action. That said, it is important to note that divesting from fossil fuels alone is not the panacea for sustainable development and organisational excellence. A company cannot divest from fossil fuels and exclaim ‘mission accomplished’ just as a golfer doesn’t finish their round after completing the 1st hole.
It is imperative that company boards consider a broader range of social issues when determining how their organisation invests capital. Customers, investors, supply chain and the broader circular economy are now expecting companies to lead from the front on big social issues. It is fantastic to see that some are already doing great things in this space.
Company boards and executives need look no further than the United Nations Sustainable Development Goals (SDGs) to get the full scope of these social issues. These 17 goals (below) form a checklist for organisations to refer to when reviewing their end-to-end operations and their investment strategy. Some of these goals may not be directly linked or relevant to every organisation, however every organisation can have a positive impact toward every goal (even if it is a small one).
The Sustainable Development Goals:
It is encouraging to see organisations of all sizes and industries taking action on their own volition. With this in mind, the following considerations are important to note:
Is it a matter of when, not if, companies will be legally required to address these social issues as part of their operations
Adjustment and alignment of business investment to properly consider the SDGs can be achieved, however, before this can be done the SDGs must first be woven into the company’s strategic plan and organisational culture.
Adjustment and alignment of business investment to properly consider the SDGs can be achieved however before this can be done the SDGs must first be woven into the company’s strategic plan and organisational culture.
Investing capital ethically is one of the simplest and most impactful actions companies can take. The impact of ethical investment is not only immediate, but it is also magnified when compared to the actions individuals alone can make. The significant increase in demand for ESG aligned investments has precipitated in a number of emerging ethical funds to help quench this demand. All products have their own approach, with many screening out fossil fuels but retaining investment in other controversial involvement areas.
As at the time of writing this article, Haven Wealth Partners is the only Australian based fund that applies a binary approach to ethical investing. By binary we mean that we assess the investment universe and as we apply our proprietary screens, we fully screen out all companies that deal in controversial areas (in any way), even those that have >5% of revenue from these areas.
The screens we apply to rule out:
Fossil Fuel (obviously)
Companies that unnecessarily create, encourage or perpetuate militarism or engage in the manufacture of armaments
Companies that restrict human rights, exploit workers or discriminate
Alcohol industry, including brewers, distillers, wine makers and pubs
Unnecessary harm to animals
Nuclear
Pork products (to cater for investor's religious beliefs)
Tobacco companies
Live export
Gambling industry
Major banks
Pornography
Mining sector
Predatory lenders
Companies operating detention centres
Companies supporting illegitimate government control of occupied territories
Companies discriminating against indigenous people
Further, we apply positive screens and seek out companies that take action in the following areas (including but not limited to):
Internal management of water, energy, pollution, and climate risks
Taking action to address gender equality/diversity
Transitioning to renewable energy sources
Community involvement and philanthropy
Strong governance and transparency
Haven Wealth Partners appreciates the commitment many individuals and organisations have toward achieving the SDGs. For companies who are looking to make the change, please reach out to our team for a discussion on how and where to begin. Haven Wealth Partners can connect you with a large community of company directors and executives who are well down this path who can share their learnings and experience.
Haven Wealth Partners is dedicated to help individuals and organisations invest as ethically as possible. Investing with Haven Wealth Partners is investing in a better tomorrow!
Nick Heuzenroeder
CEO / Managing Director
Haven Wealth Partners