From the Newsroom

Greening CVC’s investment policy on hold

Geoff Helisma|

During his term, Cr Greg Clancy has regularly attempted to steer Clarence Valley Council (CVC) towards placing its investments with institutions that don’t invest in the fossil fuel industry, however, his proposals regularly fell short of gaining majority support … that was until the April 27, 2021, CVC meeting, when he had a small victory.

At that meeting, Cr Clancy proposed in a notice of motion (NOM) that CVC “amend the investment policy to allow the divestment of its term investment portfolio from all fossil-fuel aligned financial institutions”, provided the investments’ “interest is comparable, or better, than those offered by fossil-fuel aligned financial institutions”.

Each of the other councillors voted against Cr Clancy’s NOM, but a foreshadowed motion put by Cr Karen Toms – to review CVC’s investment policy … and include options … for investing in non-fossil fuel [supporting] institutions” – was supported by all councillors, apart from Cr Arthur Lysaught.

At last week’s August 24 meeting, staff recommended that “subject to consideration of the risk management guidelines of this policy, preference may be given to financial institutions that publicly state that they do not invest in or finance the fossil fuel industry” provided it met specific parameters, including “the investment rate of return is equivalent to or more favourable to CVC relative to other similar investments” and that “it does not increase the overall risk of CVC’s investment portfolio and reduce the diversification with regards to counterparty, credit quality and its maturity profile”.

Staff also recommended that CVC “consider opening up a term deposit account with an international bank, such as the Industrial and Commercial Bank of China….”

Cr Andrew Baker initially moved a motion to delete any reference to investing with financial institutions (clause 5.11 in CVC’s investment policy) “that publicly state that they do not invest in or finance the fossil fuel industry”.

Subsequently, Cr Toms successfully moved an amendment to delete the clause from CVC’s investment strategy that considered investing with “an international bank such as the Industrial and Commercial Bank of China” (clause 2.3.3 in CVC’s investment strategy).

Cr Toms’ amendment was carried; however, the resultant substantive motion was lost, with councillors Ellem, Clancy, Novak, Toms and Kingsley opposed to Cr Baker’s deletion of considering investments with non-fossil fuel aligned financial institutions.

Cr Richie Williamson called a point of order on a subsequent motion put by Cr Toms and a foreshadowed motion put by Cr Clancy.

“The motion[s] will do exactly the same as the motion that has just been negatived,” he said, “and, as such, needs to be ruled out of order.”

Mayor Jim Simmons adjourned the meeting to seek advice from senior staff and subsequently concurred with Cr Williamson’s point.

Exasperated, Cr Toms said, “Now, we’ll have to wait three months [to reconsider the investment policy and strategy].”

The council’s general manager, Ashley Lindsay, confirmed that the revised investment policy and strategy could not be tabled until the November CVC meeting.

Staff advised that divesting its investments and moving towards implementing a ‘fossil fuel free’ investment policy would pose various risks, according to advice provided by financial and regulatory technology company Imperium Markets Pty Ltd.

 

CVC investment policy: Baker v Clancy ends in a draw

Geoff Helisma|

Over the years, Cr Andrew Baker has been outspoken when it comes to considering Cr Greg Clancy’s consistent insistence that Clarence Valley Council (CVC) should “be a leader” and move towards “divestment of its term investment portfolio from all fossil-fuel aligned financial institutions”.

At last week’s CVC meeting it seemed that Cr Clancy would have his way, albeit by taking opportunities to invest along those lines when they arose, rather than a policy that specifically aimed to end investing with fossil-fuel aligned financial institutions.

When the item was called, Cr Baker moved a motion to delete clause 5.11 from the council officer’s recommendation, which considered giving “preference to financial institutions that publicly state that they do not invest in or finance the fossil fuel industry”.

Reacting to Cr Baker’s motion, Cr Clancy asked why Cr Baker “would have a problem with addressing an important issue [climate change], which is affecting the world, if it does not jeopardise the council’s financial situation”.

Cr Baker reacted by saying: “Unfortunately the question indicates … an attempt to infer that I was against something or not…”

Cr Baker said it was “too simplistic” to “base all the value of a particular institution on publicly stating that they do not support investing” with institutions that support the fossil fuel industry.

During debate, Cr Baker said that CVC “should be seen as prudent” and that if the strategy is “brought back to us [explained] how to judge that criterion I would not have objected”.

Cr Clancy said, “If you read part 5.11 there are protections … [we’re] not directing staff to only invest with non-fossil fuel institutions.”

He pointed out that it was proposed that “preference may be given to financial institutions that publicly state that they do not invest in or finance the fossil fuel industry”, along with the three provisos that would protect CVC from making a bad investment.

“We’ve got to move on, it is the 21st century … a lot of banks are moving away from [those investments]; why can’t we be leaders?” Cr Clancy said.

Mayor Jim Simmons argued in support of Cr Baker’s motion and said that 5.11, “maybe, places an undue emphasis on investing in non-fossil fuel investments”.

Cr Peter Ellem said that, while he supported the deletion of investing with the Chinese bank, he couldn’t support deleting the option to invest with non-fossil fuel aligned institutions.

He said that retaining that part of the draft policy was akin to an “enlightened approach” that “encouraged staff by giving them more investment options”.

“The next council will look back on this one and see [we] were the fossils,” he said.

Cr Karen Toms pointed out that there are “three caveats [in 5.11] … that cover any risk [in] investing” with non-fossil fuel aligned institutions.

Cr Richie Williamson did not comment on the subject of debate; instead, he said, “Don’t get caught up in the horror and don’t count your chickens; I don’t see how this motion has five votes.”

Cr Baker wrapped up his debate with this message for Cr Clancy, “If you are serious about not investing in the fossil fuel industry, just come up with something that can give all of the residents of the Clarence Valley comfort that [the council] is prudent about how it goes about things and not rely on someone who [declares] how wonderful they are.”

Cr Baker’s motion was lost, with councillors Ellem, Clancy, Novak, Toms and Kingsley opposed.

The final result, no decision was made and CVC’s draft investment policy and strategy will have to be tabled again, but not until November at the earliest.

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