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Jun 15, 2011

Future Fund boss’ climate change views

The chair of the Future Fund's controversial views on climate change wouldn't have anything to do with the absence of climate change from the Fund's investment strategy would it?

The comments of Future Fund chairman David Murray on climate change last week quietly went through to the keeper, possibly because they were located in the back of Friday’s Financial Review in the quaint “Lunch With…” section.

“[Carbon dioxide] has got nothing to do with pollution…. carbon dioxide is not a pollutant., it is colourless and odourless. It is not a pollutant… It is a tiny proportion of greenhouse gases. There is no correlation between warming and carbon dioxide,” Murray is reported to have said.

Asked what should be done about climate change, he replied: “Take measures to stop the effects of it.” Asked about glaciers, Murray rejects any suggestion of glacial melt. “They’re not. The amount of ice in the world is slightly increasing. It is not decreasing. It is just staggering, staggering.”

Murray’s claim that the amount of ice is increasing appears to be based on the claim that Antarctic sea-ice has increased despite the warming of the Southern Ocean, commonly attributed to declining ozone levels over Antarctica or a change in the composition of the seas around Antarctica.

Alas for Murray, the Greenland ice sheet, both Antarctic ice sheets (land ice), Arctic sea ice and the world’s glaciers are all melting, in some cases at accelerating rates. A spokesman for the Future Fund did not respond to Crikey’s request for a source for Murray’s views on ice.

Murray’s position at the Future Fund — his term expires in March 2012 — is independent of government. But his breathtakingly ignorant views on climate change are not merely at odds with the Government, but officially with that of the Opposition, which according to Tony Abbott currently accepts that climate change is real and human-caused, and which supports the Government’s target of a 5% reduction in carbon emissions by 2020. Murray’s views aren’t merely at odds with reality, they’re at odds with the views of Parliament.

But this isn’t the first time climate change has been an issue for the Future Fund lately. In April, Mat Murphy at Fairfax revealed via FOI documents (or rather, via the lack of FOI documents) that the Fund’s Board of Guardians had not discussed climate change since 2007. But as a long-term investor with over $50 billion in assets under management, the Future Fund is even more exposed to the issues raised by climate change impacts, future carbon prices and the growth of renewables than most investors.

To take the most obvious example, according to last year’s annual report, 25% of the Future Fund’s equity exposure is to the financial sector, almost certainly meaning it has substantial exposure to the insurance and reinsurance sectors, both of which are on the commercial front line when it comes to climate change.

As recently as January, reinsuer Munich Re, which has been raising concerns about the impact of climate change for several years, warned that the “number of weather-related natural catastrophes and record temperatures both globally and in different regions of the world provide further indications of advancing climate change”.

According to the same report, 9% of the Fund’s equity exposure is in energy, making it a potentially significant player in both fossil fuel and renewable energy markets.

The Future Fund declined to engage on the issue of the role of climate change in its investment strategy, providing only the same anodyne response it provided regarding April’s revelations:

“…the Board develops its investment strategy to meet its mandated objective of maximising returns with acceptable but not excessive risk. In doing so the Board considers a variety of risks ranging from, for example, market and liquidity risk through to environmental, social and governance risks. In line with this, the Board’s external investment managers are also expected to consider material risks in building their portfolios on behalf of the Board.”

The Fund’s apparent recalcitrance on the issue is at odds with well-established practices by global investment funds.

“ESG (environmental, social and corporate governance investment) is not a boutique investment product, it’s mainstream, and central to the world’s largest funds,” said the Australian Conservation Foundation’s Economic Adviser, Simon O’Connor.

“This is not a soft and fluffy area of analysis, rather, this lack of a detailed consideration of ESG puts at risk the future returns to Australians from the FF — this much has been made clear in reams of ESG analysis linking financial returns to ESG factors, like that done by the UN Environment Programme Finance Initiative.”

The question is whether Murray’s climate stance isn’t merely contrary to the policies of both the Government and the Opposition but is having a direct impact on the long-term returns of the Future Fund.

This article has been corrected: Simon O’Connor is Economic Adviser for the Australian Conservation Foundation, not the Climate Institute and David Murray’s current term expires in March 2012 not 2011.

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77 thoughts on “Future Fund boss’ climate change views

  1. Kerry Lovering

    David Murray is correct.
    It is a pity Bernard Keane does not read information coming from overseas scientists who are studying the sun.
    The breath taking ignorance is all Bernard Keane’s.

  2. Shinsko

    “There is no correlation between warming and carbon dioxide” is typical of the inversion of logic being perpetuated by the denialists.

    In spite of the fact that there is no evidence for their position, and no matter many times it is pointed out that fundamental physics and our planets geological record clearly demonstrate that increasing greenhouse gas concentrations does warm the planet, they just keep trotting out the same zombie talking points…over..and over…and over…

  3. Richard Wilson

    Thank goodness for David Murray.

    If you are going to invest in anything, make sure it is for real. Notwithstanding the cretins who blog man made climate change is real and solely the product of carbon dioxide; whether you or I like it or not, coal, gas and oil will dominate energy for another 100 years because the people who own the world want us to continue to rent our existence and they can’t have their world of renters unless we are drip fed energy, medicine and media BS.

    Although the people will be forced to subsidize hazardous industries through carbon taxes, there will be no change to the way things run in the foreseeable future. There will be endless UN talk-fests where a lot of bloodsuckers fly first class and drink Bolly but nothing will come of it. That is just window dressing and feelgood politics to placate an authoritarian liberal clique. You know the kinds of people who fly first class, then wait till everybody gets out so it looks like they travelled coach.

    Medicine is never going to make you better – just keep you alive and paying, industrial food will keep you going but it won’t make you healthy, energy will be just sufficient enough to get you to work and back and provide minimal heating. It will be just enough to keep the process going but little else while surveillance of the mainstream population and intelligence will be the only growth industries as the endless central banking – warfare social control system, as Ron Paul likes to describe it, rolls on into the brave new world . At all times the machine will be lubricated by an obsequious and sycophantic mainstream media (both public and private), together with the requisite rent-seekers, and a bunch of useful idiots who can’t see the elephant in the room because they are too distracted by scoring points against righty or lefty. There are no righties or lefties – there are only owners and renters.

    What? Don’t think so! Well… that has been the lot of the Third World for the last sixty years as the West has stolen its wealth and the future of its peoples under the guise of UN Welfare. Ha ha ha!

    In the words of the late comedian George Carlin:

    “I’m talking about the real owners of this country. The big wealthy business interests that control things and make all the important decisions. Forget the politicians. They’re put there to give you the idea you have a choice. You don’t! You have no choice. You have owners. They own you! They own everything. They own all the important land. They own or control all the corporations, they long since bought and paid for the Senate, the Congress, the City Halls. ..They’ve got the judges in their back pockets and they own all the big media companies, so they control just about all the news and information you get to hear. They’ve got you by the b@!ls.”

    Thank goodness for David Murray!

  4. Michael Harvey

    Australians made it into New Scientist this week…for sending death threats to climate change scientists. Is David Murray a climate scientist? No. Are you Kerry Lovering? The Future Fund should be in the hands of scientists, not ideologues, unless we simply don’t believe in the future, but in some whacko Rapture event.

  5. GocomSys

    @Kerry Lovering
    What planet are you from again?

  6. GocomSys

    @Richard Wilson
    Confess, you are from the same planet as Kerry Lovering, aren’t you?

  7. Julie

    I am always suspicious when influential people are not open about their sources of information. The little information he shares lacks scientific understanding of evidence on climate change data.
    Not being on the regular agenda for risk assessments and planning is bizarre. What do these people get high wage packets for? It doesn’t sound like Future Fund is protecting our futures.
    Are the Board of Guardians not voicing concern? Or are they waiting for Godot?

    I am sharing this with my MP and ask him.

  8. klewso

    This “Murray, darling” bloke has something to do with running “The Fuschia Fund”, right? Please?

  9. klewso

    “Lunching With ….. The Lotus Eaters”?

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