A report from the sustainable finance charity, Mindful Money, found that investment in the fossil fuel industry for the financial year ended in September 2022 has nearly doubled over that year and grown its core businesses by a substantial 80%. KiwiSaver and other retail investment funds were found to be among the contributors to these investments as fund managers sought to make quick profits.
Investment in the sector grew by almost $3 billion over 12 months, allowing the companies to expand their exploration and field development activities. The companies appear to be focused on furthering their search for fossil fuel reserves rather than investing in renewable energy sources. Some of the companies identified as beneficiaries of this investment include Shell, BHP, Woodside Energy, and Cheniere Energy.
The renewable energy sector also saw some growth in investments of about $1.7 billion. Much of this went to Contact Energy which deals in the generation and retail sale of fossil gas that is used to generate electricity. 17% of the company’s generating capacity and 8% of its revenue come from gas for electricity generation.
It appears that many fossil fuel companies have backtracked on climate commitments that were made when oil prices were lower. Among these is Shell which announced that it would not be cutting production by 1-2% per year for the rest of the decade, but rather keep production steady. There are KiwiSaver funds invested in oil producer Shell.
Founder and CEO of Mindful Money, Barry Coates, termed fossil fuels as a risky investment, saying that at some point these companies would be left with unusable reserves and production infrastructure. He expressed concern over the decision by fund managers to put short-term profits over the long-term well-being of investors and the planet.
Coates added that it was necessary for people invested in funds to know if their monies were contributing to climate change. He noted that with the recent rise in profitability in the sector, more funds were becoming motivated to invest and capture short-term profits. He is urging investors to shift away from fossil fuels, especially in light of recent extreme climate-related disasters that have adversely affected the country’s communities, environment, and economy.
Of New Zealand’s major banks, only ANZ is continuing to invest in fossil fuels. ANZ is among the KiwiSaver providers but has said its investment increase in oil and gas production was small. The bank claims it is only investing in fuel being extracted for steel or food production, with no new investment in coal mining.
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