Download Reinvestment Small Working Group - Anglican Church in Aotearoa

Small Working Group
Reinvestment Report
1. Background
This report is the work of a Small Working Group (SWG) formed to fulfill a request made by
General Synod/te Hīnota Whānui in 2014. The motion reads:
That this General Synod/te Hīnota Whānui 2014:
Recognizing the threat that anthropogenic climate change poses to all God’s
creatures, including human beings, in Aotearoa, New Zealand and Polynesia and in all
the Earth, for present and future generations,
Noting that the huge reserves held by coal, oil and gas extraction companies far
exceed what can be burned in order to hold global warming below the internationally
agreed level of 2 degrees Celsius.
Emphasizing the Church’s mission to safeguard the integrity of creation and to sustain
and renew the life of the earth, and to seek to transform the unjust structures of
society,
Accepting the responsibilities and duties of the Anglican Church in Aotearoa, New
Zealand and Polynesia as an ethical investor,
(i) Considers ongoing investment in the fossil fuel industry to be contrary to the
Church’s missional goals of the care of creation and social justice, and to be contrary
to its responsibilities and existing commitments as an ethical investor.
(ii) Resolves that the Anglican Church in Aotearoa, New Zealand and Polynesia should
no longer invest in corporations whose main business is the extraction and/or
production of fossil fuels (coal, oil and gas).
(iii) Requests that the Standing Committee require the Trusts and other entities
investing on behalf of the Anglican Church in Aotearoa, New Zealand and Polynesia to
take all reasonable steps to ensure that the Church’s funds are not invested in such
corporations specified in (ii) and to ensure that existing holdings in such corporations
are divested within 2 years.
(iv) That this Synod/te Hīnota commission a group that would include membership
from, the Diocese of Polynesia, the Diocese of Auckland Climate Change Action Group,
Akina Foundation and other interested parties to advise on the feasibility of investing
divested funds into conservation of ecosystems and biodiversity in areas / regions of
the three Tikanga that are vulnerable to climate change and sea level rise and to
report back the General Synod/te Hīnota Whānui 2016.
Agreed.
The composition of the Small Working Group
The General Synod Standing Committee (GSSC) was charged by GSTHW with establishing a
group to consider re-investment in light of the above, and to report back to GSTHW 2016.
Membership of the group was to include the Diocese of Polynesia, the Diocese of Auckland
Climate Change Action Group, and the Akina Foundation, and ‘other interested parties’
(identified by the GSSC to include legal advisors, the fuel industry, and Church Trustees).
Nominations were sought by the General Secretary.
The members of the Small Working Group:
 Mr Fe'iloakitau Kaho Tevi for Diocese of Polynesia (a GSTHW and GSSC member, and
on our Social Justice Commission)
 Dr Matheson Russell for Auckland Climate Change Action Group
 Mr Rod Oram for the Akina Foundation
 Mr Evan Turbott for Chancellors (Chancellor of Waiapu and GSTHW member)
 Mr Graham Miller for Church Trustees (Chair of GCTB and a GSTHW member)
And recommended by the Pension Board re alternative fuel investment input:
 Mr Cameron Madgwick (CEO, The Petroleum & Production Association of New
Zealand (PEPANZ))
Dr Matheson Russell was elected Chair by the group.
The process
The SWG met several times, researched Trusts current investments and divestment
progress, and researched reinvestment options. This report was drafted by Rod Oram and
Matheson Russell before being circulated to members of the SWG for editing and approval.
The report in brief
Section 2: The first substantive section of the report answers the specific question posed in
the motion in part (iv). We find that there are currently no investments suitable for trusts
that would fulfill the goals described in the motion.
Section 3: The next section of the report discusses alternative avenues of investment. This
section includes recommendations to GSTHW.
Section 4: In the final section of the report we include a very brief overview of the data we
received from trusts on their progress in implementing the fossil fuel divestment motion.
2. Reinvestment
If a trust wanted to take its divestment proceeds from fossil fuels and invest them in
ecosystem restoration in the Pacific it would need to find a class, or classes, of investment,
compatible with their fiduciary responsibilities. The investments would need to be
conservative, capital secure, income-producing and tradeable, backed by transparent
reporting and sound governance.
While there are ways to invest in ecosystem restoration in many parts of the world,
including the Pacific Islands, few if any of the methods offer yet those characteristics
required by trusts, according to the research we have done.
This conclusion is borne out by various experts we have consulted. For example, such a form
of tradeable securities “doesn’t really exist to my knowledge,” said Joanna Silver, who
helped develop the NZ Stock Exchange’s Environmental Registry. She has more than 10
year’s experience in market-based environmental mechanisms around the world, based
initially here in New Zealand then later in London.
However, such investable mechanisms are likely to emerge in coming years, according to
the Stockholm Resilience Institute. One of its reports has charted progress by analysing 300
international case studies of investing in ecosystem restoration. The majority of the
restoration projects provided net benefits.1
"Our analyses showed that even under a worst case scenario investing in restoration still
breaks even or provides a financial profit in a majority of the studied ecosystem types,"
writes Thomas Elmqvist, a members of the Resilience Centre and one of the authors of the
analysis published in Conservation Biology.
Ecological restoration programmes can contribute to new job opportunities and livelihoods
both in rural and urban areas, play a pivotal role in mitigating some of the effects of climate
change and increase the ability of ecosystems to gradually adapt to climate change and
other global changes, the report says.
3. A current alternative to reinvestment
Given the lack of reinvestment opportunities compatible with trusts’ fiduciary
responsibilities, GSTHW might consider alternative ways to support ecosystem restoration
projects in the Pacific.
A wide range of government and non-government organisations are involved in such work.
Many projects seek to attract outside financial support.
1
Groot, R.S. de , Blignaut, J. , Ploeg, S. van der , Aronson, J. , Elmqvist, T. , Farley, J. 2013. “Benefits of investing
in ecosystem restoration”. Conservation Biology 27(6): 1286 1293.
Leaders of such projects include government agencies such as NZ Aid, the NZ government
agency (www.mfat.govt.nz/en/aid-and-development/), and USAID, international bodies
such as the United Nations Development Programme and the Asian Development Bank, and
NGOs such as WWF (its New Zealand branch co-ordinates WWF’s work in the Pacific).
Similarly, a number of other members of the NZ Council for International Development are
engaged in such work too.
Other active organisations include Conservation International, The Nature Conservancy, the
International Union for the Conservation of Nature, and the Wildlife Conservation Society.
Another example is the fledgling Pacific Environment & Climate Exchange, based in Suva.
While forest conservation through the creation of a carbon market is a key plank, the idea is
to not rely solely on carbon trading. It hopes to find investors who are interested in
supporting indigenous landowners protecting their natural areas, achieving economic and
social objectives, as well as environmental ones.
One of the founders of PECX was Fe'iloakitau Kaho Tevi, a member of GSTHW and this Small
Working Group, when he was with IUCN in Fiji.
Being able to draw on the expertise of such organisations would be a considerable benefit
to GSTHW. The partners would ensure money was invested well, projects were run
effectively, local co-benefits such as employment identified and results reported
transparently, advised Peter Hardstaff of WWF New Zealand.
Some of these projects will in due course identify how much carbon dioxide the forests or
bush restoration will absorb. These could then be expressed as offset units that can be sold
to people and organisations seeking to mitigate the carbon dioxide their activities generate,
since it is the main greenhouse gas responsible for climate change.
For example, GSTHW could consider buying carbon offsets for the air travel necessitated by
its work. With this approach, the calculation of how much carbon dioxide generated by the
travel would be made by an external organisation, such as CarboNZero, part of Landcare
Research, the Crown Research Institute. It would then advise GSTHW how to offset that
carbon by investing in forests or ecosystem restoration that absorbed the equivalent CO2.
One example of this type of development is the work of Ekos, a New Zealand charitable
trust led by Sean Weaver.
“The three Pacific Island rainforest protection projects I am involved with will be producing
in the order of 66,000 tonnes CO2e carbon offsets annually starting in a few months time,”
Mr Weaver said
“Buying carbon offsets and/or Habitat Hectare units from these projects is one way of
making a disciplined and transparent investment in climate resilience and poverty
alleviation in rural Pacific Island communities.
“We are still testing the market and will need a few years of such testing before we will have
revenue data that can translate into confident projections sufficient for commercial finance.
But we may be in a position to explore soft loans or something like this.” More information
is available at http://www.ekos.org.nz/our-business.html
Another example of this approach comes from Greenfleet Australia. It is already well
established in using the sale of such offsets to fund ecosystem restoration in Australia. It is
seeking to develop such projects in Fiji and other parts of the Pacific, said Wayne Westcott,
its CEO, and Michael Coleman, its General manager Revegetation. More information is
available at www.greenfleet.com.au
As for other types of ecosystem-related projects, Annette Lees, who has wide experience of
them across the Pacific, offers these examples:
Small-scale community income generation conservation initiatives, which are common
throughout the Pacific. They usually indicate that local priorities are leading the
conservation initiative although they may have external investment and support.
Ecotourism initiatives are common in this category but the category can be quite diverse,
including hand-milled timber, and local fishing coops. For example, a Solomon Islands
project which began in the late 1990s with a community extracting oil from a forest growing
nut for a New Zealand-developed cosmetic product. The initiative is still going strong and a
forest has been protected as a result.
The category includes the Pacific programmes of global initiatives. They tend to focus on
approaches such as legal protection of ecosystems, education of local people, building local
capability for technical ecological work such as mapping and species identification,
addressing governance and management issues.
The Secretariat for Pacific Regional Environment Programme is a regional government body
based in Apia that coordinates a lot of the conservation work in the region, supporting
national governments in their obligations and responsibilities for conservation. It is an
important point of contact, through, for example, Stuart Chape, its director of Biodiversity
and Ecosystem Management.
National conservation initiatives. This is developing into a major thrust thanks to some
interesting work being done by government, local NGOs (such as Nature Fiji) and
partnerships (such as the Locally Managed Marine Areas
Networkhttp://lmmanetwork.org/). But all of it is under-resourced. Some of the bilateral
aid programmes have supported interesting national-level initiatives.
In light of developing field of ecosystem restoration in the Pacific, the Small Working Group
respectfully recommends that:
o General Synod/te Hīnota Whānui considers establishing a carbon offset programme
for its air travel, with the funds being allocated to Pacific ecosystem restoration.
o General Synod/te Hīnota Whānui considers co-investing in restoration projects with
government or NGO agencies.
o General Synod/te Hīnota Whānui keeps a watching brief on developments, with the
aim of drawing attention to trust compatible investment opportunities when they
arise.
4. Results of the survey of Trusts
In the course of the SWG’s work we surveyed church Trusts to gather information about
their progress and learning through the process of divestment and reinvestment.
The 32 Trusts on the Schedule to the Authorised Anglican Trusts Act were surveyed.
19 of the 32 responded.
1 no longer exists.
1 operates outside of the province (Melanesia).
Key findings:
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9 Trusts reported that they hold no investments in coal, oil or gas companies.
1 Trust at the time of the Survey reported that it completed the divestment process.
4 Trusts holding fossil fuel investments at the time of the survey expected to be fully
divested by the time of GSTHW 2016.
More than one Trust reported difficulties in finding suitable alternative international
share funds to invest in that meet the fossil fuel divestment (and other ethical
investment) criteria.
The SWG would like to thank the St John’s College Trust Board, the St Stephen’s and Queen
Victoria Schools Trust Board, and the Anglican Church Pension Board for their more detailed
responses.
12 Feb 2016