A fossil free retirement

In 2050, I’ll turn 65 and will hopefully be retiring from a career in which we solved climate change and no longer burn any fossil fuels. So when I went back to Australia last summer to visit friends and family, I thought it would be a good idea to look into my Australian retirement savings account (called Superannuation in Australia) to see where it was invested.

It didn’t make a lot of sense to me to be investing (knowingly or unknowingly) in an industry I am actively working towards the end of. The short-term gains (last year at least) were eventually going to dry up as we reached the end of our carbon budget to stay below 2oC of warming. That’s the problem with physics – it doesn’t negotiate.

One of the arguments that has been used against divestment is the idea of fiduciary responsibility – that Universities or Pension funds are required to look only at what is in the best interests for the returns of the fund. Since our global economy has been entirely centered on burning fossil fuels for growth since the industrial revolution, investing in oil, gas, and coal companies has been a safe long-term bet.

However, the world has changed and large institutional investors haven’t caught up yet. According to the Global Carbon Budget 2015, the world collectively has 903 Gigatonnes of CO2 remaining in our budget if we are to stay below 2oC. At current rates of business as usual, we will blow that budget in approximately 20 years, well before my retirement.

Grey: Total quota for 2°C. Green: Removed from quota. Blue: remaining quota.
With projected 2015 emissions, this remaining quota drops to 865 Gt CO2
Source: Peters et al 2015; Global Carbon Budget 2015

As a millennial, this means my choices are to remain invested in fossil fuels in the knowledge that the majority of their assets will be stranded and worthless more than a decade before I retire, or I can divest and know that the financial stability of my retirement doesn’t depend on an industry whose business model is incompatible with a livable climate. As I like to joke with friends: we will either live to see the end of the fossil fuel industry or the beginning of the end of civilization.

While divestment has grown in leaps and bounds over the past few years thanks to the work of 350.org and the Carbon Tracker Initiative, it still proved difficult to divest when I got home. I checked the holdings of my current fund to find out that two of their top ten holdings were BHP Billiton and Rio Tinto, and when I emailed them to ask about their plans to divest got a longwinded response about how they were engaged on climate and focused on minimizing climate risks, but had no plans to divest.

My next step was to go to the financial advisor my parents have their savings invested with. In what was possibly his shortest client meeting, I sat down, told him what I’d found about my current investments and that I wanted to divest from fossil fuels. Simple, right?

The financial advisor sent me back a list of options that had lovely sounding names like ‘Future Leaders Fund’, but when I looked them up on the website SuperSwitch that helps people find out if their retirement savings in Australia are invested in fossil fuels, I found some of them listed as ‘Tier 1’ meaning they derived a majority of revenue from fossil fuel extraction, transport or generation.

Because I’m stubborn and stuck to my guns of refusing to accept a retirement savings fund that was invested in any fossil fuels, I eventually found my way to Future Super. Unlike the other funds I’d looked at by this point, Future Super list the companies they are invested in upfront on their website. Founded by Simon Sheikh, the previous National Director of the Australian advocacy group Get Up!, it is Australia’s first completely fossil fuel free retirement savings fund, and with the ongoing downturn in the price of oil this year, it’s already outperforming the rest of the market.

image via Future Super

For me, it’s quite simple – there is not only a moral imperative to make sure my retirement savings are not profiting off further damaging the climate, but it also makes good financial sense to make sure I’m not left holding the bag when we stop burning fossil fuels long before I retire. I’m in good company too – in March 2015 the Rockefeller Brothers Fund announced they would be divesting, and in September of the same year, actor and climate activist Leonardo DiCaprio also announced he would be divesting from fossil fuels. 

Having successfully divested my retirement savings in both Australia and Canada, I can now get back to working hard to solve our climate challenge to make sure that fossil free future is there for us in 2050.

image of Three Mile Beach, Port Douglas Qld via Amy Huva (cc)