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Responsible Investment Policy

Council has recently approved a new policy for the Society’s financial reserves that are invested to generate income and capital growth for the Society, writes Treasurer Graham Goffey.

1 December 2020

Image by Lorenzo Cafaro from Pixabay

The Society’s directly held investment portfolio comprises mostly large, ‘blue chip’ companies. Under the responsible investment policy, environmental, social and governance (ESG) considerations are incorporated into the investment manager’s selection of, and interaction with, companies within the portfolio. The policy is intended to reflect the Society’s values of sustainability, responsibility and stewardship and to more explicitly align its investment portfolio with Paris Accord targets.

The extractive sector is a particular policy focus and the Society is clearly well placed to consider the crucial role of geoscientists and extractive companies in the responsible supply of sustainable energy and critical minerals through the energy transition and beyond. Demand is growing for critical minerals e.g. for electrification and power storage, whilst in the absence of radical demand reduction, continued investment is needed to meet global hydrocarbon demand for energy and feedstock for plastics, pharmaceuticals, fertilisers, etc.

The energy transition requires a focus on demand reduction and science-based policies that ensure emissions from domestic and industrial activity are substantially reduced, not simply offshored. The use of carbon capture and storage (CCS) to reduce net global emissions has long been advocated by the Society, which recognises that extractive companies are best positioned through expertise and capital to deploy CCS. Gas is also likely to be utilised with CCS in the production of decarbonised ‘blue’ hydrogen fuel, whilst extractive companies are increasingly aware of the need to reduce the carbon footprint of their activities. The responsible investment policy will prioritise any Society investment holdings in this sector into well-managed, responsible companies undertaking or working towards sustainable extraction.

The Society will avoid investment in companies involved in certain emissions-intensive fossil fuel extraction and combustion activities, unless significant mitigating factors are identified; for example, emissions reduction via CCS. Investment exclusions are also applied to tobacco, alcohol, arms companies, etc. Preferred extractive companies are those working to appreciably reduce their carbon footprint and which are in the vanguard of strategic and operational change towards meeting Paris Accord goals.

Through its deep understanding of the critical role of the extractive and energy sectors, the Society is not anti-fossil fuels. Its investment policy reflects a balanced consideration of how to best achieve the Paris Accord targets and encourage progress towards meeting of the UN Sustainable Development Goals.

For full details of the Responsible Investment Policy, refer to www.geolsoc.org.uk/About/policies

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