Investment manager says no to plea for fossil fuel-free investment fund

Allan Gray says there are better ways to fight climate change

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Activists from Fossil Free South Africa, seen here at the University of Cape Town a year ago, have called on South Africa’s major investment fund managers to set up a fossil-free fund. Archive photo: Marecia Damons

Investment giant Allan Gray has said no to pleas by activist group Fossil Free South Africa (FFSA), on behalf of more than 100 Allan Gray clients, to set up a fossil fuel-free investment fund.

In a letter addressed to Allan Gray, FFSA urged the company to create a “fossil-free” South African equity fund and divest from fossil-fuel companies “as soon as possible”. The letter is part of a campaign, launched in 2021, aimed at South Africa’s seven biggest investment managers.

“This is not some whacky radical demand,” FFSA coordinator David Le Page said in a statement. “The petition simply echoes the stance of the United Nations whose Secretary General, Antonio Guterres, has said: ‘I call on all financial actors to abandon fossil fuel finance and invest in renewable energy.’ We’re just asking Allan Gray to properly align itself with best international practice,” said Le Page.

Allan Gray’s Chief investment officer, Duncan Artus, said the establishment of a fossil-free fund was not the answer.

“Climate change is one of the biggest threats that faces society today … We fully support the global transition to a more environmentally sustainable society. We also recognise the role we play in being part of the solution.

“We do not believe the establishment of a fossil fuel-free fund, nor divestment, is the answer. We believe that the best approach is to use our active investment strategy to tackle climate change. We engage with management and boards of investee companies on climate risks and use our influence to push for positive change and to encourage better environmental decisions and disclosure,” Artus said.

He said the company’s approach was outlined in a climate policy statement, available on its website. “We report the progress we make on climate change-related engagements in our annual Stewardship Report.”

“Divestment from fossil-fuel companies is no panacea for climate change, but it is a vital tool in staving off deepening, unmanageable climate change at a time when every possible mitigation measure must be used”, said Le Page.

He said similar letters would be sent to Coronation Fund Managers, the Government Employees Pension Fund and the Public Investment Corporation, which manages the government employees’ pension money, Old Mutual, Sanlam and Stanlib, as 90 or more clients of each company signed up in support.

TOPICS:  Climate change Economy Environment

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