The Guardian Media Group, publisher of the award-winning newspapers Guardian and Observer, has announced that it will sell off all fossil fuel assets in its £800 million investment portfolio.
Neil Berkett, Chairman of the Guardian Media Group, justified the decision citing financial and ethical reasons. The share of fossil fuel assets in GMG’s investment portfolio is in ‘low, single digits’, but the divestment decision is in line with the United Nation’s campaign that argues that fossil fuel assets and investments would be worthless if government’s around the world starting taking actions to reduce greenhouse gas emissions.
Historically, alternative investment avenues have yielded better returns than natural resources. As Berkett explained in an article published on the Guardian, the S&P Global Water Index gave an annualised return of 13.4% over the last 10 years, outperforming traditional natural resources as well as the broad global equity index. Similarly, the FTSE Environmental Technology 50 Index has yielded 6.9% annually over the last 10 years, higher than absolute returns generated by commodity futures.
The decision was announced a day after a deadline for countries to announce post-2020 emission reduction targets central to the Paris climate change agreement expired. By 1 April, 7 countries, including the EU, had submitted targets to reduce greenhouse gas (GHG) emissions. Many more countries are expected to submit such mitigation targets over the course of the year. If a Paris deal is indeed agreed upon, the fossil fuel assets would most likely be the first targets of countries around the world to cut GHG emissions, thus driving their value down.
So, the Guardian’s decision seems not only based on ethics and financial gain, but common sense as well!
Guardian Media Group is not alone in adopting this strategy. More than 180 groups have announced similar measures to shed fossil fuel assets from their investment portfolios. Syracuse University announced that it will divest $1.18 billion worth of investments in fossil fuels-linked assets. Before that, the Rockefeller Brothers Fund divested all of its fossil fuel assets, worth about $860 million. And recently, the world’s largest sovereign wealth fund — Norway’s Government Pension Fund Global — announced that it had sold off stake in 53 coal companies from around the world, including the world’s largest coal mining company, Coal India Limited.
Guardian Media Group has also called upon 2 of the world’s biggest charitable funds — the Bill and Melinda Gates Foundation and the Wellcome Trust — to divest their holdings in assets linked to fossil fuels.
Image Credit: Bryantbob | CC-BY-SA 3.0
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