Published: September 22, 2016 |

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Futuregrowth Asset Management, SA’s largest specialist fixed-income money manager, said it has suspended funding to the coal industry until it develops environmentally sustainable methods of operating.

The decision is based on the company’s investment principles, Chief Investment Officer Andrew Canter said Tuesday at a conference on sustainable investment in Johannesburg. Futuregrowth, which has about R170bn in assets, is owned by Old Mutual Plc.

Coal is burned to produce more than 70 percent of electricity in Africa’s most-industrialized economy. State power company Eskom Holdings SOC Ltd. is spending 306 billion rand to build two coal-fired plants with a combined capacity of almost 9,600 megawatts after underinvestment in new generation caused power shortages on about one hundred days in 2015.

“We had to have a discussion whether we want to fund coal at all, because of the sustainability impact,” Canter said by phone later. “Coal is dirty, but the lights are going off and this was the debate.” The company would rather be “on the right side of history,” he said.

Futuregrowth said at the end of August that it had suspended funding to Eskom, rail and ports operator Transnet SOC, South African National Roads Agency SOC Ltd., the Land Bank of South Africa, the Industrial Development Corp. of South Africa and the Development Bank of Southern Africa, citing concerns about how state companies were being run, government infighting and threats to the independence of the Finance Ministry.

The company, based in Cape Town, will only review offering loans to the coal industry if it shows signs of moving to newer and more sustainable methods of using the fuel for energy, Canter said Tuesday.

Source: (September 20, 2016) Business Day

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