The decision to prevent KiwiSaver default funds from investing in fossil fuels is being described as “virtue-signaling hypocrisy” by New Zealand’s minerals sector industry organisation Straterra.
Straterra CEO, Chris Baker says the move won’t have any impact on emissions.
“We support moves towards a low carbon economy and the transition out of fossil fuels but the key to reducing emissions from fossil fuels is to reduce demand. This decision does nothing to address this. It just reduces the pool of assets KiwiSaver funds are able to hold.”
“Will KiwiSaver funds be prevented from investing in companies that use fossil fuels? Transport, industry, energy construction and just about every other sector are dependent on fossil fuels in one way or another.
“The motorist filling up their car is not being penalised but the companies that enable them to do that are. It is dishonest to demonise fossil fuel producers and put fossil fuels in the same category as illegal weapons when people are happily using fossil fuels every day. It is also dishonest to give New Zealanders the impression that decisions like this are having an impact when they are not.”
He says coal producers are meeting demands from New Zealand and overseas.
“Domestic demand comes from the agricultural sector, steel manufacture, generation of electricity at Huntly (as a back up to our renewable resources to maintain security of generation), and to a minor extent to heat schools and hospitals mostly in the South Island where reticulated natural gas is not available.
“Reducing emissions from fossil fuels will occur as mechanisms such as the newly strengthened Emissions Trading Scheme runs its course and competitiveness and cost burdens allow.”
Mr Baker says this announcement is a distraction from other steps to reduce emissions.
However, commerce and consumer affairs minister Kris Faafoi says the move reflects the government’s commitment to addressing climate change and moving towards a low-emissions economy.
“It also makes sense for the funds themselves given that there is a risk of investing in stranded assets as the world moves to reduce emissions.
“In 2017, the $47 billion NZ Superannuation Fund adopted a climate change investment strategy that resulted in it removing more than $3 billion worth of stocks that exceed thresholds for either emissions intensity or fossil fuel reserves, without negatively affecting performance. So we know that moving away from investments in fossil fuels doesn’t have to mean lower returns.”
Minister Faafoi said the government would make sure Kiwisaver members have all the information they need to make good decisions about their fund.