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Councillor questions finance authority's leadership on fossil fuels

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City councillor Phil Martin has criticised a Local Government Finance Authority recommendation for its members to vote against divesting from fossil fuels.

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Martin moved a motion at an Adelaide City Council meeting in August calling on the LGFA – a body that provides financial services to South Australian councils  – to consider developing a policy to divest itself of any fossil fuel-related investments and interests.

In its agenda for its upcoming AGM in October, the LGFA states that it does not consider it necessary to create a policy on fossil fuel divestment and that it will take no further action to explore the motion.

“LGFA has neither direct exposure to the fossil fuel industry not equity interests in a fossil fuel related company or corporation,” the agenda states.

“LGFA also considers that our indirect exposure to the fossil fuel industry, fossil fuel-related company or corporation is negligible.”

But Martin argued the LGFA is indirectly investing in the fossil fuel industry by engaging with the National Australia Bank and Westpac, both of which he said loaned to companies involved in the fossil fuel industry. He said the LGFA was further investing in fossil fuels through its index funds, which he said were also tied to NAB and Westpac.

“I think that people don’t understand the intricate web of investment with fossil fuels and, until it’s fully understood, all levels of government will continue to unwittingly invest in fossil fuels,” Martin said.

“You have the LGFA who are using bankers who are a part of the big four (banks) who are using probably investment vehicles like superfunds who are also investing in fossil fuels.

“They’re now not making this declaration… this is the LGFA who should be a leadership example for councils.”

A spokesperson from the LGFA told InDaily the authority was unable to comment on its recommendation, as its members were yet to vote on the matter.

The spokesperson said the LGFA board – chaired by financial governance consultant John Comrie and comprising a range of local government representatives and one member appointed by the State Treasurer – made the recommendation.

At the August council meeting, Martin also put forward a motion for Adelaide City Council to investigate divesting from banks which supported the fossil fuel industry.

Central ward councillor Houssam Abiad amended the proposal, arguing the impacts of divesting from fossil fuels needed to be thoroughly considered before council made a commitment.

But Martin told the meeting council had already commissioned a report on the impacts of fossil fuel divestment and sustainable procurement in 2015, proposed by then area councillor Robert Simms.

Martin told InDaily today that the report was completed in 2016 but it had never been tabled in council.

An internal council document from October 2015 indicated the report would be prepared in late 2015, but it stated “no action” would be taken further.

InDaily contacted Adelaide City Council to inquire about the outcome of the report, but the administration was unable to provide a response.

Robert Simms, who is running for council at this year’s election, told InDaily today that he was unable to comment on the outcome of the report as he had left council by the time it was completed.

However, he said that if re-elected to council he would “certainly” propose the council divest from fossil fuels regardless of the LGFA’s position.

“In terms of the Adelaide City Council, I think there is an opportunity for the council to take matters into its own hands,” Simms said.

“It would have been fantastic for the council to be the first in Australia to completely divest from fossil fuels but now the horses have bolted and there are other councils across Australia – Melbourne Council for example – that have stepped on this space.

“Adelaide City Council has a $200 million budget. Who the council banks with sends a big message.”

Deputy Lord Mayor – and Lord Mayoral candidate – Sandy Verschoor said she was also unable to comment on the LGFA’s position, but said: “Regardless of the LGFA’s view, divesting of fossil fuels is something that we should do as a city council.”

“If elected I want it to be a fundamental part of everything that we do – to consider every action in terms of its environmental impact,” she said.

“The best place to start is in your own backyard and then work our way forward by talking to other councils and then eventually bringing it back to the LGFA.”

Council will note the LGFA’s recommendation to not proceed with a fossil fuel divestment policy at tomorrow night’s council meeting.

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