Professor Ian Young, Vice-Chancellor of the Australian National University, announced on 9 October 2014 that
the university would divest itself of stocks in seven companies. This followed adoption of a Socially Responsible
Investment (SRI) Policy and advice from the Centre for Australian
Ethical Research (CAER), which rated the stocks on Environmental, Social and Governance (ESG) performance.
The ANU's decision has come in for criticism from mining industry representatives and the Australian Government for doing too much as well as from environmental activists for not doing enough. This range of criticism supports my own view, which is that the ANU has got Socially Responsible
Investment Policy about right.
Some commentators suggest that ANU should leave any decisions on environmental effects of investment to the Australian Government and invest purely on financial criteria. However, if anyone should be investing with a view to the future, it is a university. I teach ANU students "ICT Sustainability" and professional ethics. The ANU's approach fits with what I teach and might make a case study for future courses.
Some commentators have criticised the ANU for not consulting the companies before deciding to divest their shares and others criticised it for not making all the details of the decision process public. However, shareholders are not required to consult a company before selling shares, they may need to inform the market if this could effect the market overall, which ANU has done. ANU has been more transparent in its investment decision than other institutions.
The ANU will have further difficult decisions to make over other
investments. The seven companies divested so far are only about 5.1% per cent of the
University’s Australian equity holdings (1% of total investments). The university can't avoid all environmental harm, or it
would not be able to operate at all. Also it must consider the short term
financial aspects as well as long term social ones.
As Professor Young, a respected scientist, said, climate change is "the most serious issue ever to have
faced humanity". Combating global warming will inevitably adversely effect export of Australian fossil fuels, particularly coal. I suggest it would be preferable for Australia to start to adjust to this reality now, rather than wait until changes are imposed on it later.
As an Adjunct Lecturer at ANU (not a salaried employee), I don't have a financial interest in ANU's investment policy. However, I do contribute to a private sector ethical superannuation investment fund, which has a Socially Responsible
Investment Policy. This has provided a good financial return on my investments (so far), as well as helping Australia adjust to a low carbon future.