20 April 2015
Mr Tim Hollo
Director
Green Music Australia
BY EMAIL
Dear Tim
Re: Approaching APRA about fossil fuel divestment
Further to my interim response to your letter of 24 February, the APRA Board has now considered your
letter and requested that I write to you in the following terms:
1. The APRA Board wholly supports the concerns, aims and objectives set out in your letter.
Moreover, the Board absolutely appreciates the significance of the issue and both the symbolic
and practical importance of the kind of action urged in your letter.
2. For APRA, however, there are obvious and serious governance considerations to be taken into
account, primarily arising from its position as a trustee of its members’ and affiliates’ funds
pending distribution. These considerations essentially equate to a legal obligation to ensure
the best possible security attaching to such funds while obtaining a reasonable commercial
return for the financial benefit of its members. To some degree these considerations operate
to inhibit what might otherwise be our investment policy.
3. APRA currently places all of its investment funds into term deposits held with one or other of
the major banks. It should be noted that APRA has no investments other than term deposits,
ie, it has no direct investments in shares in any company.
4. On our initial scrutiny and due diligence on the list of financial institutions included in the
Market Forces database, only one – Suncorp – would appear to currently satisfy both our
required level of investment security (albeit at a higher risk profile than the major banks) while
apparently providing zero support for fossil fuel producers. Conversely, it has been pointed
out by one of our Board members that ANZ is the largest lending institution to renewable
energy producers in Australia, while Suncorp currently provides zero support in that regard to
renewable energy producers.
5. Accordingly, the APRA Board has directed the following course of action on the part of
management:
(a) Our term deposits with the major banks are to be reduced at the earliest opportunity, with
the balance of funds available to be placed on deposit with Suncorp. Given its obligations
of financial prudence, however, the Board has directed that no more than 25% of
investable funds are to be placed with any single financial institution, including Suncorp;
(b) We are to write to each of the major banks with whom we have funds advising them of
the basis upon which our decision is being made, and requesting that they give a full
explanation of their policy with respect to companies involved in fossil fuel production
and any changes in the pipeline in that regard. The Board has also asked that we enquire
of each bank’s level of investment/involvement in renewable energy – as a possible
offsetting factor to be taken into account in future investment decisions;
(c) We will include a statement of support for the Green Music Australia cause, as well as a
statement on our amended investment policies, in our governance report to the
membership this year;
(d) We will seek over the next 12 months to further diversify APRA’s investments to attempt
to achieve a much greater holding of total funds invested with financial institutions
which provide zero support for fossil fuel producers or which are leading players in the
encouragement of renewable energy production;
(e) We will use our influence to encourage other music industry institutions to follow a
similar path, including AMCOS;
(f) We will seek to report to you regularly on continuing progress in meeting the
abovementioned goals.
We would be happy to meet with you in the near future to discuss these policy objectives and of
course I would be happy to refer back to the APRA Board any other information you would wish to
have them consider.
With kind regards
Brett Cottle AM
Chief Executive
APRA AMCOS
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