The Dunedin City Council's decision to dump investments
in fossil fuel extraction is being hailed as visionary, but
opponents warn it will come at a cost to ratepayers.
Councillors on Tuesday voted on an ethical investment policy
for the $76.3 million Waipori Fund, deciding not to invest in
the munitions, tobacco, fossil fuel extraction, gambling or
This means it will divest itself of any investments in those
industries, including much of the $1.7 million invested in
fossil fuels, within two years.
The decision to include fossil fuel extraction in the policy
has been praised as ''precedent-setting'' for New Zealand but
councillors Andrew Whiley and Hilary Calvert were yesterday
worried about the cost to ratepayers.
A report by Russell Investments provided to councillors
estimated not investing in fossil fuels would have cost it
$2.2 million - or $170,000 a year - in the period between
2000 and 2013.
An ethical investment policy, including alcohol (which
councillors on Monday voted against adding to the policy),
tobacco, gambling, armaments and fossil fuels was estimated
to cost the council about $500,000 a year.
Mayor Dave Cull said other councils would probably follow
''I think they are going to have to. I think the imperatives
of climate change are such that everybody is going to have to
grapple with it,'' Mr Cull said.
It would be ''inconsistent'' for the council to be taking
measures to mitigate the effects of climate change while
investing in ''the things that actually cause'' it. There was
also an ''increasing appreciation of the risk'' of investing
in fossil fuel companies.
''As the world has to grapple with moving to a low-carbon
economy that actually the carbon reserves ... won't come out
of the ground, so the asset value of those companies will go
Mr Cull was keen to point out that councillors voted against
investing in fossil fuel ''extraction'' and not the retail of
Dunedin City Council group chief financial officer Grant
McKenzie said an ethical investment policy would probably
lead to more ''volatility'' in the fund, as the stocks
excluded tended to be ''steady'' or ''countercyclical''.
Countercyclical stocks did better during difficult financial
times than other investments, Mr McKenzie said.
Running costs of the fund were also likely to increase.
''It often costs more to have a socially responsible
investment policy because you are having to do more research
on the companies.''
Staff would come up with more precise estimates of the costs,
Cr Calvert said the decision was ''irresponsible'' because
councillors were not fully aware of how much it would cost
''We are arguing about $20,000 here and there, and with the
stroke of a pen councillors were prepared to cost the
ratepayers of Dunedin close to $170,000 [a year],'' she said.
Cr Whiley said the move sent a ''very negative message'' to
companies exploring for gas off the coast of Otago. The city
should be welcoming them and he hoped the move would not put
them off using the city as a base if commercial quantities
The council would still be investing in companies that
produced greenhouse gas emissions, meaning ''nothing is going
to change'', he said.
Mr Cull took issue with both Cr Calvert and Cr Whiley's
criticisms, saying all councillors had a copy of Russell
Investments' report and knew about the financial
The decision was ''a completely separate issue'' to oil and
gas exploration off the coast of Otago.
''They are not coming to us for investment; they would be
looking for a logistical base.''
Cr Jinty MacTavish, a strong advocate for including fossil
fuels in the policy, said all Dunedin people should be
''proud'' of the decision.
''I am really proud of our city, not just the council, but I
am really proud of our community for standing up so strongly
and saying that they wanted an ethical investment approach.
''I think Dunedin has led the way on a number of issues and
this is just another example of Dunedin being the leader in
progressive policy,'' she said.
Green MP Gareth Hughes, one of many to praise the decision on
social media yesterday, compared the council's move with the
beginnings of the Nuclear Free movement.
''It's a bold foresighted step that is showing true national
leadership and I congratulate the council,'' Mr Hughes told
the Otago Daily Times yesterday.
The decision received praise from climate-change action
groups 350 Aotearoa and Coal Action Network Aotearoa.
The issue prompted a stoush between councillors on the Progas
Otago Facebook page, with Cr Kate Wilson taking issue with Cr
Whiley including her on a list of councillors who voted for
fossil fuels to be included.
Cr Wilson said she abstained from the vote, which eventually
prompted Cr Whiley to amend the list and apologise.
Fossil fuel move
• DCC thought to be first council in New Zealand to
divest itself of investments in fossil fuel extraction.
• The city joins more than 20 United States cities,
including San Francisco, Seattle, and a Dutch town, that have
The Waipori Fund
• Established after the
Dunedin City Council in 1998 sold its 100% holding in Waipori
Power Generation Ltd and its 42% holding in United
• After repaying associated debt, the council was left with
just over $56m cash.
• That became known as the Waipori Fund, which has been a
significant contributor to council coffers since.
• Provides a source of revenue that can be used to offset
• The last annual return to the council recorded, to the end
of the last financial year in June 2013, was $7.5m.
Do you support the decision by the Dunedin City Council to
adopt an ethical investment policy for the $76.3 million
Telephone your answer today to the Otago Daily Times'
Teletopics line (03) 467-7123, Dunedin-area calls are free;
email us at firstname.lastname@example.org.