Reduced income after ‘ethical investment’ decision

Ethical investment decisions made by the Dunedin City Council last year have led to substantially reduced returns from investment funds.

ODT reports: City pays cost for divesting

Some of the Dunedin City Council’s divestment decisions have cost the city, it was revealed at yesterday’s council finance committee meeting.

Group chief financial officer Grant McKenzie said the Waipori Fund had realised some losses as a result of the council’s decision to divest from some sectors, but the total amount was not clear.

The council voted last May to scrap any investments the fund had in the munitions, tobacco, fossil fuel extraction, gambling or pornography industries and to bar future investment in those industries.

While they are now forbidden areas of investment I haven’t seen any claims that there were any investments in munitions, tobacco or pornography.

Is oil, coal and mineral extraction really on the same ethical level as them? To the Greens perhaps. Or they wanted to make ‘ethical investment’ sound better when their target was primarily mining and drilling.

The ethical investment policy gave the fund two years to exit those industries, but Mr McKenzie confirmed yesterday the last of its positions – BHP Billiton and Rio Tinto – were sold earlier this year.

But there were investments in mining, something Greens want to stop – and there’s a definite Green lean to the Dunedin City Council.

‘‘We are now in a position that we have completely divested in those shares,” he said.

The fund had produced $783,000 in profit during the eight months to February 29. However, this was $1.657 million down on the budgeted $2.44 million profit.

Some of the unfavourable variance was because of divestment losses, Mr McKenzie said.

  • Budgeted $2.44 million profit
  • Actual $783,000 profit

That’s a significant reduction to under a third of budgeted returns.

Green anti-mining and anti-drilling policies appear have come at a significant cost to Dunedin ratepayers.

And we still need oil and mineral products.

And we don’t seem to have made millions from clean green alternatives.