Kiwi investment in planet-damaging fossil fuels nearly doubles

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Kiwi investment in planet-damaging fossil fuels nearly doubles

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Kiwi cash invested in Big Fossil nearly doubled in a year, says a sustainable finance charity. Cash with companies planning to expand their fossil fuel operations rose from $1.6 billion to $2.9b in 12 months, according to new analysis by Mindful Money. Founder Barry Coates said the results are worrying, with fund managers chasing short-term profits over the long-term wellbeing of investors and the planet. The world has already got enough coal, oil and gas, he said. READ MORE: * NZ investment funds had more than $100 million invested in Russia * KiwiSaver funds dump $331 million of fossil fuel investments * Monday thoughts: In a climate crisis, should I invest in oil companies? ANZ one of the biggest KiwiSaver providers and the only major bank to still invest in oil and gas production said its increase was small. In the analysis, Coates tracked the investment in two groups of businesses those expanding the production, supply and use of coal, oil and gas, and those switching to green energy. The list of companies planning expansion includes Exxon Mobil, Shell and BP, plus state-owned organisations such as Saudi Aramco. These companies are spending billions of dollars exploring for new reserves of fossil fuels and comparatively little on renewable forms of energy, the report said. Meanwhile, climate scientists warn that large amounts of already discovered fossil fuels must remain in the ground for a half-decent chance at successfully limiting global heating to 1.5C, which would reduce heatwaves, storm damage and food shortages . Other companies including gentailer Contact Energy, which burns fossil gas to generate electricity have plans to move away from polluting fuels and into low-carbon energy at the rate required for 1.5C, the analysis noted. The countrys investment portfolios, including KiwiSaver funds, are worth more than $90b. The report found the group doubling down on fossil fuels last year represented nearly $3b of that cash, compared to $1.7b with transitioning firms. Investment in companies expanding fossil fuel operations increased 80%, or $1.3b, between 2021 and 2022. These organisations share prices rose during that time, which Coates said accounted for about $600m. The rest was fund managers buying more stock. There is a real increase in the amount of investment going on, he said. Coates said this should be a wake-up call that investment decisions put the planet and peoples nest eggs at risk. After Russia invaded Ukraine, fossil fuels extractors made record profits. But over a decade, Coates said, fossil fuel companies have significantly underperformed other investment portfolios. With big economies including China, the EU and the US pouring money into renewable energy and EVs, fossil fuels are a risky investment, Coates added, even from a purely financial point of view. At some stage, [fossil fuel producers] are going to be left with unusable reserves and production infrastructure. Investment in transitioning companies increased 25% across the same period. Currently, ASB, BNZ, Kiwibank, TSB and Westpac wont invest in companies extracting or producing coal, oil and gas. That will include Big Oil companies such as BP and ExxonMobil. ANZ is an exception. The bank wont invest in coal mined to generate electricity, though fuel extracted for steel or food production would be OK. It also excludes unconventional oil and gas meaning fossil fuels pulled out of oil sands and coal seams. The banks KiwiSaver funds hold shares in oil producers including Shell, Australian firm Santos and Japan-based Mitsui Oil. An ANZ spokesperson said that the bank increased its exposure to expanding oil, gas and coal companies by a small amount, though significantly lower than the industry-wide increase mentioned in the report. ANZ fund managers could achieve positive outcomes by engaging with companies and voting on environmental initiatives, the spokesperson added. However, we recognise that engagement may prove ineffective in some instances, and in those cases divestment may be the most appropriate course of action. At this stage, we assess each company on a case-by-case basis. Coates disputed that fund managers could, by keeping a seat at the table, encourage coal, oil and gas producers to embrace renewable fuels. That flies in the face of the very obvious evidence that far from improving their practices theyre doubling down. Despite their exclusions, ASB, BNZ and Westpac KiwiSaver funds invest in fossil-expansionist companies, according to Mindful Money analysis , including Australian mining company BHP and French electricity generator Engie. Last year, BHP sought the Australian governments permission to expand a coal mine by 4000 hectares, which would provide fossil fuels until 2116. Engie is expanding its fossil gas network. Westpac disputed the characterisation of BHP and Engie. Nigel Jackson of BT Funds Management which looks after the banks investments said both have clear targets, pathway plans and are taking action to meet their net-zero commitments. Fund managers regularly assess and monitor the sustainability and climate performance of companies we invest in, Jackson added. ASB, BNZ and Westpac also invest in transitioning companies, holding shares in Contact Energy. Our weekly email newsletter, by the Forever Project's Olivia Wannan, rounds up the latest climate events. Sign up here .