Paris Climate Change Conference: Local Greens optimistic that Randwick Council will be inspired to adopt “positive discrimination” investments in favour of non-fossil fuel associated banks – 2nd December 2015

“Australia must stop digging new coal mines” replied the President of the doomed island nation of Kiributa when asked this week in Paris as to what help he needed from us.

The sardonic plea might have been communicated to our local Councillors last night when they debated whether to further divest Randwick Council from coal investments, but it wasn’t.

As the President was participating in the Paris Climate Change Conference, Randwick was voting down a move by Greens Councillors Matson and Shurey to positively discriminate investments by the Council in favour of financial institutions that do not lend to fossil fuel companies.

But the Greens remain upbeat over the loss and are hoping that good news coming out of Paris may inspire a rethink by their fellow Councillors.

March in March 16-3-14 Big Solar 035

Time to divest from coal to save the world’s island nations from inundation.

Councillor Matson said the day after the meeting that “the global recognition is spreading that coal mining is a sunset energy industry”. He elaborated,

“If really inspiring commitments are made in Paris towards achieving genuine cuts in global emissions then I have no doubt that Randwick Councillors will also rise to the challenge and will adopt positive discrimination as our investment policy.”

BACKGROUND:

Randwick City Council Administration and Finance Committee Meeting 1st Dec. 2015

From Councillor Murray Matson

Proposed amendment to Finance Report No. F17/15 – Subject: Investment Policy

I believe that with the Paris Climate Change conference currently underway it is time for local government authorities to be proactive in nudging our society and financial institutions towards greater recognition of the need for action.

The current recommendation suggests the adoption of the following clause (found on page 16)

Fossil Fuel Investment.
Where financial institutions are offering equivalent investment returns with the same credit rating, and the investment fits within the provision of this Investment t Policy, preference  will be give to placing funds with institutions identified as not deal with fossil fuel companies.

PRINTED RECOMMENDATION:

“That the attached Investment Policy be adopted with the addition of the proposed Fossil Fuel Investment clause.”

TEXT OF SUGGESTED GREENS AMENDMENT

“That:

  1. the attached Investment Policy be adopted with the addition of the proposed Fossil Fuel Investment clause; and
  1. a further report be brought back assessing divestment achievable to the Council through weighting non-fossil fuel dealing financial institutions one Standard & Poors credit rating higher when assessed against institutions offering equivalent investment returns.”

 BACKGROUND

Standard & Poors Investment Grade (Source Wikipedia)

  • AAA: An obligor rated ‘AAA’ has extremely strong capacity to meet its financial commitments. ‘AAA’ is the highest issuer credit rating assigned by Standard & Poor’s.
  • AA: An obligor rated ‘AA’ has very strong capacity to meet its financial commitments. It differs from the highest-rated obligors only to a small degree. Includes:
    • AA+: equivalent to Moody’sAa1 (high quality, with very low credit risk, but susceptibility to long-term risks appears somewhat greater)
    • AA: equivalent to Aa2
    • AA-: equivalent to Aa3
  • A: An obligor rated ‘A’ has strong capacity to meet its financial commitments but is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligors in higher-rated categories.
    • A+: equivalent to A1
    • A: equivalent to A2
  • BBB: An obligor rated ‘BBB’ has adequate capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments.

Non-Investment Grade (also known as speculative-grade)

  • BB: An obligor rated ‘BB’ is less vulnerable in the near term than other lower-rated obligors. However, it faces major ongoing uncertainties and exposure to adverse business, financial, or economic conditions, which could lead to the obligor’s inadequate capacity to meet its financial commitments.
  • B: An obligor rated ‘B’ is more vulnerable than the obligors rated ‘BB’, but the obligor currently has the capacity to meet its financial commitments. Adverse business, financial, or economic conditions will likely impair the obligor’s capacity or willingness to meet its financial commitments.
  • CCC: An obligor rated ‘CCC’ is currently vulnerable, and is dependent upon favorable business, financial, and economic conditions to meet its financial commitments.
  • CC: An obligor rated ‘CC’ is currently highly vulnerable.
  • C: highly vulnerable, perhaps in bankruptcy or in arrears but still continuing to pay out on obligations
  • R: An obligor rated ‘R’ is under regulatory supervision owing to its financial condition. During the pendency of the regulatory supervision, the regulators may have the power to favor one class of obligations over others or pay some obligations and not others.
  • SD: has selectively defaulted on some obligations
  • D: has defaulted on obligations and S&P believ

 

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