A guide to greener banking: I divested my personal finances and you can too – here's how
What if your money was quietly fuelling the climate crisis – and you had no idea?
If you bank with one of the big four or have retirement savings in superannuation, there's a good chance it is. In Australia, many major banks and most default super funds continue to invest in fossil fuel companies and their coal, oil and gas projects, driving global warming.
That's where the global divestment movement comes in.
Divestment means shifting your money out of harmful industries and into more ethical, climate-positive alternatives. It's the opposite of investment – you simply pull your capital out of companies or funds that contribute to environmental or social harm.
Over the past few years, I've delved into divesting my personal finances and learned some key ways this shift can make a real difference.
If you only tackle one area of divestment, make it your super – it's often your largest pool of money beyond property, and too often it's channelled into fossil fuels.
The climate lobby group Market Forces estimates $150bn of Australians' retirement savings – roughly $6,200 per member account on average – could be tied up in 190 global companies driving the most climate damage. And such investment is growing, meaning our retirement savings are increasingly being used to create a more polluted world to retire into.
One way to find a better option is to use the Market Forces comparison tool. It profiles more than 70 fund options, pinpointing just seven that fully exclude fossil fuels and the so-called 'Climate Wreckers Index' of the world's worst polluters.
Using this type of information, I divested from a large Australian super fund which has known investments in fossil fuels and moved to a fund that excludes major polluters such as Woodside, Whitehaven Coal, Santos, Origin and AGL.
Justin Medcalf, co-founder of Ethical Advisers' Co-op and Unless Financial, says to beware the 'devil in the detail'. For example, some funds use a tiered threshold screening, which may allow investment in companies earning limited amounts of their revenue from coal mining.
'A lot of investors assume that having a screening process in place means zero exposure to fossil fuels. It can be a rude surprise to discover there is still exposure,' Medcalf says. 'Ultimately, there is no perfect portfolio. For now, it's 'how do we create the best version of something that isn't perfect?''
All four of Australia's big banks – ANZ, Commonwealth Bank, NAB and Westpac – pour billions into fossil fuel projects each year, as do many other major players.
In 2021, when searching for my first mortgage, I saw the chance to divest from a big four bank and switch to a more ethical option. I told my broker I wanted a home loan that was both competitive and backed by a bank that doesn't fund fossil fuels. We landed on one of the few with a cleaner track record.
To find out where your bank stands, use Market Forces' Compare Banks tool. It includes a 'tell them to stop' button, so you can quickly send a message and easily demand change. That's crucial, says Medcalf. 'A lot of people move their money but don't say anything, so the bank never knows why. A key part of the divestment movement is communicating,' he says.
And it works. Just last year, Commonwealth Bank broke ranks and announced it would stop financing fossil fuel companies that don't comply with Paris climate goals. 'That was quite a considerable win and a lot of that is attributed to the divestment movement,' Medcalf says.
If you're investing in shares, ETFs or managed funds, beware of greenwashing. Many mainstream investment products – even those labelled 'sustainable' or 'balanced' – still include major polluters.
Tools like the Responsible Investment Association of Australasia's certification and the Ethical Advisers' Co-op's Leaf rating can help you find investment products and services that meet high standards of environmental, social and ethical performance.
'We need a mindset shift,' Medcalf says. 'Rather than thinking 'what can I avoid?', think 'what can I actively invest in?' Yes, we want to avoid industries that aren't creating a positive future, but we can also get behind the industries of the future.'
And divesting doesn't have to mean missing out financially – it may even boost your returns. RIAA's 2024 Benchmarking Report shows responsible investment funds have outperformed mainstream ones by 3% over 10 years, and 1.5% over five years.
For long-term investors, especially those in their 30s and 40s, Medcalf says it makes sense to start factoring in environmental risk. Fossil fuel assets are increasingly seen as vulnerable, with tightening regulations and the growing risk of becoming 'stranded' and unprofitable.
If you want to go a step further, consider strategically buying into a polluting company along with fellow shareholder activists who then band together to demand change from the inside. You can get started with as little as $500 using the Sustainable Investment Exchange (SIX) platform.
Whether you divest, reinvest or become an activist shareholder, the point is the same: your money is powerful and you can actively choose whether it props up harmful industries or helps build a better future.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Guardian
2 hours ago
- The Guardian
Is the cost-of-living crisis over? Victoria's new treasurer is optimistic, but housing remains a battleground
Victoria's new treasurer, Jaclyn Symes, is confident cost-of-living pressures will ease by the next election – and that voters will be less concerned about the state's soaring debt once they see the completed projects it has helped fund. In an exclusive interview with Guardian Australia after handing down her first budget in May, Symes also signalled openness to reforming stamp duty. But she hit back at industry groups like the Property Council, calling on them to move beyond criticising current policies and offer solutions: 'Saying, 'Don't do this,' that doesn't particularly help me. I have a policy brain, I like to find problems and fix them.' The upper house leader made history in becoming Victoria's first female treasurer after she was handpicked by the premier, Jacinta Allan, to take over from retiring Tim Pallas in December. Symes inherited a mountain of debt, and the recent budget forecasts it to climb even higher, to $194bn in 2028-29. That's up from just $21.8bn before Labor took office in 2014, after years of rapid public sector growth, major infrastructure spending, the pandemic and subsequent credit rating downgrades. Symes's first budget was sold as a turning point, delivering a $600m operating surplus and a slight drop in net debt relative to the state's economy. It also included unexpected federal windfalls, which Symes defended using to ease cost-of-living pressures – pointing to $18m for food relief as one of her proudest budget items. 'People have asked, 'Couldn't you have had a higher surplus?' Sure. But it wouldn't have felt very good knowing we're not supporting some of those services that people doing it really tough are relying on,' Symes says. Looking ahead to 2026 – the year of the next state election – Symes is optimistic that the cost-of-living crisis that has engulfed Australia will have eased. She says interest rates are coming down, housing supply is growing and, for the first time in years, wages are forecast to outpace inflation. Sign up for Guardian Australia's breaking news email 'All the signs are there. But if we go too early and abandon the people that are still struggling, then I wouldn't feel very proud about that,' she says. She hopes that people will soon be 'feeling more confident and not worrying about the cost of every meal that's going on the table'. 'That's what you want for all Victorians, but that's not the case right now'. Symes also believes that state debt won't dominate the election debate, and that voters will instead be grateful for the infrastructure it's funded, including the Metro Tunnel and West Gate Tunnel, both set to open this year after huge cost overruns. Symes points to Sydney's $21.6bn Metro, which also ran billions over budget but is now popular with voters: 'The day it opened, people were like, 'Oh, actually, this is a worthwhile investment.'' The budget also brought pain for some, with 1,200 public sector jobs set to go, with the treasurer warning more job losses are likely once the government receives the recommendations of a review, a move Symes defends as tough but necessary. 'Do I want people to lose their jobs? No. But I also have a responsibility as treasurer to make sure that we are being cost-effective,' she says. Sign up to Breaking News Australia Get the most important news as it breaks after newsletter promotion At parliament last week, it became clear housing will be a key battleground at the next election. While the premier pledged to get 'millennials into homes' through planning reform and an extension of stamp duty concessions for new apartments, units and townhouses, the opposition announced a revived 2022 policy to abolish stamp duty for first home buyers on properties worth up to $1m. The shadow treasurer, James Newbury, says it would give 'young Victorians the final leg up they need', but Symes is sceptical, questioning both the opposition's costings and the policy's failure to increase housing supply. Stamp duty remains a huge revenue source for the state – forecast to bring in $11bn in 2028-29. But it's loathed by homebuyers and economists. The Grattan Institute's Brendan Coates calls it 'the worst tax in Australia', as it locks people into their homes, discourages downsizing and acts as a 'tax on divorce' – as separating couples will both have to go on to pay it. Many economists have long called for it to be replaced with a broad-based land tax. Asked if she would consider such a move, Symes leaves the door open: 'I'm always open to having discussions about tax reform. I've got the finances to manage so I can't make reckless announcements.' Last week, Symes addressed a post-budget Property Council breakfast, where she faced a tough crowd. Before she took the stage, Lendlease's Adam Williams warned that property taxes would soon make up 47% of the state's total tax revenue. In the Q&A segment, a member of the crowd said tax on foreign investment was 'killing' developers. Symes tried a joke: 'Let's have a show of hands – what's the worst tax? What's your favourite tax?' It fell flat. Newbury called her 'tone deaf' and 'out of touch' and criticised her for previously describing the role of treasurer as 'fun'. But Symes says she's not fazed by criticism, and that she's been underestimated before: told she couldn't be agriculture minister because she wore wedges to a farm and dismissed as attorney general for 'giggling like a schoolgirl'. 'The commentary that actually affects me more than anything else is the young women, particularly high school girls, who say, 'We have a female treasurer. That's so cool.''
The Guardian
2 hours ago
- The Guardian
Australian high-speed rail has barely left the station – some experts say a new US project shows a better way
Progress has been slow on the proposed high-speed rail line between Sydney and Newcastle since the establishment of the High Speed Rail Authority (HSRA) in 2023, and the federal government is yet to commit to building the megaproject. But some experts say there may be a cheaper and easier way to do it, pointing to a US example of what can be achieved. The Newcastle-Sydney high-speed rail line is estimated to cost at least $30bn and take well over a decade to build. The HSRA has spent its infancy developing yet another business case, starting with Sydney-Newcastle, to ultimately form part of a Melbourne-Brisbane line in the second half of this century. Sign up for Guardian Australia's breaking news email Geotechnical drilling has begun to determine how to tackle the mammoth task of traversing the Hawkesbury River with services that can reach a top speed of 320km/h. Meanwhile, Infrastructure Australia is evaluating its business case and will shortly make a recommendation. By contrast, a longer line linking the eastern outskirts of Los Angeles with Las Vegas at similar speeds is being built for a fraction of the cost and time. The private-led Brightline West represents an approach that is in many ways the polar opposite of how Labor is pursuing the technology in Australia, experts say. With construction estimates soaring, experts are now questioning if Australia is letting perfect be the enemy of good and risking a cost blowout that would crush the chance of the line ever being built. The HSRA plans to establish a service between central Sydney and Newcastle's Broadmeadow, running end-to-end in an hour, with a stop at Gosford. The journey on the existing Newcastle-Sydney line takes about 2.5 hours, almost half an hour longer than an express service achieved in the mid-20th century. The HSRA chief executive, Tim Parker, wants to build dedicated dual tracks so that high-speed trains won't have to interact with slower trains, a contrasting approach to how high-speed rail expanded in most countries. Spain's high-speed train, for example, shares sections of track with slower services. While it must slow down in certain sections, this philosophy presents an opportunity to roll out fast train technology in stages and more cheaply. Not only is building a dedicated line more expensive, the Sydney-Newcastle corridor will require an engineering feat to construct what would be the world's longest rail tunnel to allow trains to cross the Hawkesbury River without compromising speed. 'They've picked a starting stretch that is the hardest and most expensive part of the entire east coast,' says Garry Glazebrook, an associate professor at the University of Technology Sydney. The business case has not yet been made public, but the price tag is expected to be eye-watering. Modelling for the New South Wales government's 2019 plan to build a line without federal help reportedly predicted it would cost about $30bn and take 12 years to build just the first stage from Gosford through the Hawkesbury to a station at Sydney Olympic Park – a cheaper option than Central. The costs proved too great. The then Perrottet government abandoned the plan at the end of 2022. Brightline West broke ground in April 2024. Despite covering a 315km point-to-point distance – nearly three times as long as Newcastle-Sydney – construction is expected to be completed swiftly, with services for the 2hr 10min trip to be operating in time for the 2028 Los Angeles Olympics. The project's most up-to-date budget is US$12.5bn (about A$19.5bn), already overrun from a 2020 estimate of US$8bn, but still a fraction of the cost of the Australian proposal. Brightline West – owned by Fortress Investment Group – is funded by a mix of equity, private finance, federal government grants and California and Nevada state-issued tax-exempt bonds for private ventures in the public interest. It is entirely unrelated to the California state government's plan for an LA-San Francisco line, which has been held up as an example of disastrous infrastructure projects in the US. Approved in 2008, no track has yet been laid and cost estimates have more than tripled to US$128bn. Donald Trump has vowed to block federal funds previously promised to the LA-San Francisco project, but administration officials appear satisfied with Biden-era commitments to the Brightline model. Those costs and timeframe may appear ambitious, but Brightline has already established a Miami-Orlando line that reaches 200km/h – just shy of the high-speed definition. The first section, between Miami and West Palm Beach, broke ground in 2014 and was in service by 2018. Brightline West's impressive price tag and timeframe are only achievable through several compromises. Most of the line will initially run along a single track with passing loops , reducing speed accordingly. It will also share its corridor with the Interstate 15 Highway. The track will be built down the I-15's median strip, with trains travelling alongside road traffic, similar to a number of existing rail lines in Perth. This delivers serious savings. Building just one track is cheaper, and land acquisition and permissions are streamlined. Perhaps the greatest compromise is that Brightline West will terminate in Rancho Cucamonga, on the eastern outskirts of LA. While avoiding costly construction in built-up urban areas, passengers will need to connect to existing, slower rail to make the 67km journey to Union station in the heart of the city's downtown. Building anything in Australia is expensive, and rail even more so. Alon Levy is the co-lead of the transportation and land use program at New York University's Marron Institute, and researches why construction costs differ between countries. He believes Newcastle-Sydney already has unnecessary costs baked in thanks to overly prescriptive demands from government. 'It's a foolish requirement this early on to not share any tracks with commuter lines,' Levy says. 'You leave less space for the experts to find cheaper workarounds and drive innovation.' Australia's rail industry is another problem, Levy believes. Australian governments rely heavily on consultants for infrastructure planning, a symptom of the hollowing out of departments of expertise. 'This problem is common in Anglosphere governments,' Levy says. They bring in outside consultants who work on one thing then disband and the expertise vanishes.' Levy believes an Australian government – either the commonwealth or NSW – should establish a 'public sector consultant unit' for rail expertise, which it can then provide to other states to work on their projects at cost, a model successfully proven in France and Italy. The profit motive of companies such as Brightline can also bring down costs by pushing the limits of what is possible. 'They go out to the market and challenge their suppliers … to push the technical limits, so trains can move through difficult stretches and save the company from spending billions moving dirt around,' one rail source who requested anonymity says. 'But in Australia, governments want already proven technology, they want a safer bet that is future-proofed, and that often means being overengineered and double the cost necessary. It's always got to be the gold standard.' Rail unions also increase construction and operating costs. 'Unions have enormous say, it's just the way we work in Australia,' Glazebrook says. Union pressure is broadly seen as having pushed NSW to build new metro tracks for driverless trains with a private operator. A separate rail source, unable to be named due to their work, said the new metro extension under Sydney harbour could not have been built had it been subject to existing Sydney Trains union agreements, due to the line's gradient. Herein lies a catch-22, Glazebrook says. By adopting the proven European approach – staged building using existing tracks already subject to union agreements – construction and operation are beholden to stringent standards that increase the cost and timeframes of projects. Building dedicated tracks is a way to bypass such pressures and can allow for the automation of driving and fewer staffing requirements, saving money on operations once the line is running. But construction costs will soar. 'You throw everything together and you get a real bloody mess,' Glazebrook says. Experts are now questioning if Newcastle-Sydney is the smartest place to start. Glazebrook still backs the proposal put by his group, Fastrack Australia, for the HSRA to begin by upgrading the Sydney-Canberra line in stages to high-speed capability. Its easier terrain makes it lower-hanging fruit, even if trains don't run along the Federal Highway's median strip. Others say Canberra-Sydney more closely resembles the value proposition of Brightline West – the potential to capture market share where air or car trips have dominated. Taxpayers currently foot the huge travel bill of bureaucrats and politicians flying between Canberra and Sydney. The existing train service takes about four and a half hours – a 90-minute high-speed alternative could attract that business to rail instead. The existing Newcastle-Sydney service – ticketed at $11 – takes only an hour and a half longer than the proposed high-speed trip. While local rail experts are not proposing to copy Brightline's model exactly, most agree there are attitudes worth adopting to avoid Australia's high-speed rail ambition being shelved. 'We don't want to let perfect be the enemy of the good,' Glazebrook says.
The Guardian
2 hours ago
- The Guardian
In Australia's post-US future, we must find our own way with China
Thanks to US regional strategic primacy, Australia has been virtually immune from the threat of direct military attack since the defeat of Japan in 1945. Now that is changing. In future it will no longer be militarily impossible for China to attack Australia directly. And not just China: other major regional powers, especially India and eventually perhaps Indonesia, will have the potential to launch significant attacks on Australia. That does not mean we now face a serious threat of Chinese military attack. Today the only circumstance in which Australia could credibly find itself under attack from China would be if Australia joined the US in a war with China over Taiwan. Reports that Australia is a target of Chinese cyber and intelligence operations do not show that Beijing poses a military threat to us, any more than our cyber and intelligence operations targeting China provide evidence that we pose a military threat to them. It is harder to say whether China might become militarily aggressive towards us in future. We cannot assume that it will from its military buildup alone, because countries often expand their armed forces to defend themselves rather than to attack others. But, equally, we cannot rule out the possibility that China might decide to use armed force against Australia in decades to come. Some aspects of China's naval buildup, especially its sustained investment in aircraft carriers, which would have no useful role in a US-China war over Taiwan, suggest that it wants to be able to conduct long-range power-projection operations, which could encompass Australia. Nonetheless, it does seem unlikely. For one thing, it is a little hard to imagine what China's purpose might be in attacking Australia, given that we are not an easy country to invade. And if we get our defence policy right it should be possible for us to raise the cost to the point that it is not worth China's while. This all means that, while we should not ignore it, we should not allow the distant possibility of a Chinese military threat to dominate our thinking about China. There are many other dimensions to what is a very important, complex and ultimately inescapable relationship. It is also a relationship of a completely unfamiliar kind. Other than our two great allies, Australia has never before encountered a country as large, as powerful, as influential in our region, as important to us economically, and with close heritage connections with such a large proportion of our population, as China. Once we abandon the illusion that the US is going to manage China for us, we will realise that we have no choice but to find our own way. This will not be comfortable or easy. China is ruthless, demanding and completely transactional – though no more than other great powers. Over the past decade, in Canberra and around the country, exaggerated fears and a desire to stay in step with Washington have crowded out serious thinking about China itself and how the complex range of interests we have in our relationship with it can best be balanced. We have less deep expertise on China now than we had 30 years ago. That has to change. Our second big task is to rethink our relationship with the US. In the decades before the mid-1990s, there was an assumption that – in a Whig-view-of-history way – Australia was gradually but ineluctably emerging from dependence to independence as we left our colonial and imperial past behind and embraced our Asian future. That died away around the time John Howard became prime minister in 1996, when it seemed to many people that the future was America's, and that Australia's future was to become ever more tightly entwined with it, strategically, economically and culturally. This was the time when a US-Australia free trade agreement seemed both essential and sufficient to guarantee Australia's economic future, and when America's place as the world's dominant military power seemed unchallengeable. The economic illusions of that era were soon overtaken by the hard realities of China's rise but the strategic illusions have survived. Indeed, they were strengthened by the 'war on terror' and have been intensified again by the rising fear of China. So we clung on and stopped imagining we could do anything else. Sign up to Five Great Reads Each week our editors select five of the most interesting, entertaining and thoughtful reads published by Guardian Australia and our international colleagues. Sign up to receive it in your inbox every Saturday morning after newsletter promotion It is often said, for example, that the intelligence relationship is so close and so important to both sides as to be indissoluble. Don't bet on that. US access to Pine Gap as a location for its satellite ground station is valuable but far from essential. Our access to US intelligence under the Five Eyes arrangements is very beneficial and, in some ways, irreplaceable, in that it provides intelligence we could not get in other ways. But that does not mean we could not get by without it. We certainly could. As things get tough with Washington over the months and years ahead, there will be a temptation to try to placate Donald Trump and earn his favour by meeting his demands for increased defence spending, or by siding with the US in its economic war by cutting links with China. There may be good reasons to increase defence spending but trying to buy Trump's favour is not one of them. Likewise, that futile goal would in no way offset the many powerful arguments against joining a US-led anti-China economic coalition. There are no favours we can do Trump which will keep the US strategically engaged in Asia and committed to Australia's defence. We need to bear these cold realities clearly in mind as we think about our future relations with Washington. The first step is to recognise that the end of the alliance as we have known it for so long does not mean the end of the relationship. We have been close allies for so long that it is hard to imagine what other form our relationship might take. But with careful management, a new, beneficial post-alliance relationship can evolve, just as our relations with Britain evolved after it withdrew from Asia in the late 1960s. We continued to have close and productive defence and security links, drawing some strength from our shared history together. Singapore offers another instructive model. It is not a US ally but it has an excellent relationship with Washington, including deep defence links. We should aim for a post-alliance relationship like that with the US in the years ahead – and we should be building it now. That does not mean severing ties with Washington but it does mean changing the relationship fundamentally. Above all, it means acknowledging that the security undertakings in Anzus can no longer be the foundation of our strategic policy, or of our relationship with the US. The Canberra establishment is shocked by any suggestion that we should walk away from the Anzus commitments. They think we can and must depend on the US more than ever in today's hard new world. But that misses the vital point. It is not Australia but the US that is walking away from the commitments it made in the Anzus treaty in very different circumstances 75 years ago. That was plain enough under Joe Biden. It is crystal clear today under Trump. This is the lesson we must draw from Washington's failure to defend Ukraine, from its crumbling position in Asia and from US voters' decisive rejection of the old idea of US global leadership to which we still cling. Our best path now is to recognise this and start acting accordingly. Hugh White is emeritus professor of strategic studies at ANU. This is an edited extract of Hard New World: Our Post-American Future, published today in Quarterly Essay
