The man paid to kill off fossil fuel divestment

An old member of the anti-carbon regulation brigade has suddenly reemerged on the scene, talking down fossil fuel divestment. Could this suggest fossil fuel companies might just be scared of the movement?

Silhouette of man in a doorway

The movement to encourage investors to divest from fossil fuels, led by Bill McKibben’s 350.org, has chalked up some prominent wins in recent times. Coal as well as oil and gas companies and their industry associations play down the wins as inconsequential, yet it hasn’t stopped them from paying a long-standing opponent of carbon pollution controls to try to undermine fossil fuel divestment.

So are the wins significant?

The money involved was relatively small, but the symbolism was worth its weight in gold when the Rockefeller Foundation declared its intention to pull out of fossil fuels. This is a charitable foundation built from the fortune of the very man who created the oil industry – he who established Standard Oil, the mother of present day oil giants Exxon-Mobil and Chevron.

The first critical win in Australia has been to start getting some of the so-called ‘ethical’ or ‘socially responsible’ funds to stop their rather bizarre practice of talking big on climate change while still continuing to throw money at fossil fuel companies. You’d think this was a given, but you’ve got to start somewhere.

In addition Sydney University and, more recently, Australian National University have made divestment commitments. This includes ANU divesting from Santos. This is again a symbolically important development. It’s one thing to divest from some small coal mining company, it’s a completely different matter to divest from an ASX major like Santos, who likes to position itself as a good guy on climate change.  

But again, we’re talking pretty small fish.

What is more notable in financial terms was the $29 billion HESTA fund – the health industry's super – declaring a plan to steadily withdraw from thermal coal. And also, the $8 billion Local Government Super fund announcing it will no longer invest in coal companies. If the divestment movement can get more super funds like these withdrawing from coal it could start to make a serious dent.

However, in overall terms the money we’re talking about is still chicken feed. But as George Soros and John Maynard Keynes, among others, have observed: investment markets are characterised by mob behaviour. Once momentum builds in a particular direction others join in. The other critical element providing wind for the sails of the divestment movement is that coal miners have encountered genuine financial difficulties in recent times.

Back in June I was a little puzzled to receive an unsolicited e-mail newsletter in my inbox headlined, Sustainable Resource Investment Briefing. I’ve since received one of these newsletters each month since.

Given the name, including the title ‘sustainable’, I thought this must be some investment analysis evaluating the risks associated with activities that aren’t environmentally sustainable.

But instead it told me:

– United States and other government carbon pollution control policies would have little impact on fossil fuel use;

– The International Energy Agency had warned the World Bank against applying restrictions on lending for construction of coal-fired power stations; and

– there was a “positive long term outlook for Australian coal and related infrastructure assets”.  

The source of the newsletter was an organisation called ITS Global. Having been closely engaged in climate change policy debates for a decade-and-a- half this was an organisation I knew very well.

ITS Global are not investment analysts but, rather, a public relations outfit established by a Mr Alan Oxley. The former head of the Australia Institute, Clive Hamilton, described Oxley as follows:

The Chairman of Monash University’s APEC Study Centre and former trade ambassador, Oxley has been involved in almost every major initiative and lobbying effort of the climate skeptics brigade since climate change first came on to the public agenda in the early 1990s.

Oxley has been downplaying the importance of global warming and exaggerating the costs of lowering carbon emissions as a professional media talking head for a very long time. Judging from his early writings on the topic, his involvement seemed to stem from a fear that Europe was trying to use climate change and environmental issues more generally as a Trojan horse to justify trade restrictions that would disadvantage Australia relative to European companies. Yet while his experience lies in global trade and diplomacy it hasn’t stopped him from being actively involved in activities that claim the vast bulk of atmospheric scientists don’t know what they’re talking about.

In the last few years his prominence in Australian climate policy debates dropped away, but he has suddenly popped up again – rather prominently – on matters related to fossil fuel divestment. Just yesterday, ABC media reported that Oxley was now an “energy consultant” and ITS Global were “energy specialists”. One wonders why they are also heavily involved in fighting restrictions surrounding the use of palm oil in food products – but hey, maybe it could be also be used as a biofuel.  

Oxley is quoted by the ABC as saying that the divestment movement has had little to no significant impact on fossil fuel investment decisions. In addition, he claims most investors are likely to ignore their advice about the risks posed by potential government regulatory initiatives to contain carbon emissions.

This might be true. Yet if that’s the case one wonders why the Minerals Council felt the need to pay him to prepare a detailed report attempting to rebut the divestment movement. One also wonders why his firm is bothering to dedicate staff to the task of producing and distributing a detailed monthly newsletter to media outlets talking down fossil fuel divestment. 

Investment mob behaviour is an amazing thing, once it starts it is very difficult to stop. All it can take is a compelling story – and this one has a very large proportion of the scientific community behind it, which is more than most investment crazes can claim.

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