NEWCASTLE City Council is here to stay. Therefore its decision to screen its investments for social and environmental impacts makes sense. It will help build a prosperous and healthy future for the city and the Hunter.
The council is being prudent. Investments in businesses that produce hazardous products, exploit workers, harm the environment and damage communities are a risk to financial, social and environmental health.
History is littered with cities and regions that failed to see the future until it was too late. Remember Kodak? What about Xerox or Bausch & Lomb? These “Big 3” companies were global leaders but came under pressure in the 1980s as a result of rapid technological changes and increased global competition.
At their peak, they employed 20per cent of the workforce of their American host city, Rochester, NY. When these companies went belly-up or moved, Rochester suffered a rapid loss of jobs and serious hardship, which hit the poorest families and young people worst.
Luckily Rochester’s political and business leaders responded in a timely way. The city has gone through a prolonged period of economic transformation and reinvention, and though this has been painful in many respects, the area is now well positioned for the future. It built from its unique set of assets – a highly skilled workforce, world-class higher education institutions, and a forward-looking co-operative engagement between the public and private sector.
An active city government, working collaboratively with a progressive business community and with the education and workforce development sector – and supported by the New York state and federal governments – has enabled Rochester to reinvent itself as a diverse economy.
The city now has many thriving small and medium businesses in photonics, foods, electronics, healthcare, education, and consumer and business services. A regional Entrepreneurs Network has assisted established firms and new ventures, including early-stage technology developers, secure equity financing and win government contracts.
Newcastle and the Hunter can learn from the experience of Rochester and hundreds of other cities around the world: don’t lock yourself into old technologies, dying industries or just a few major employers. Don’t get stuck, but use pluck – and shift investment to new skills and technologies.
Financial experts are telling us that coal is no longer a good investment as coal prices have collapsed and are unlikely to rise. The days of fossil fuel energy systems are clearly numbered, and as mines become unprofitable coal companies are retrenching workers.
The burning of fossil fuels, especially coal, is driving global warming. This week, leaders of six of the smallest Pacific island nations facing a potential wipe-out from climate change have called for a global moratorium on new coal mines. Locally, mining coal has left our valley devastated. We have growing conflict between global mining companies and local farmers, wine growers, horse-breeders and residents concerned about their health and sustainability.
It’s a pity therefore that some of the region’s rusted-on politicians, and the coal industry, have been so quick to criticise Newcastle City Council’s decision.
Research suggests that socially responsible investment (SRI) portfolios that are based on screening companies where investments might be made for governance as well as social and environmental impact have, over the long-run, met or beat non-SRI benchmarks. Environmental, social, or corporate governance programs can improve returns, but these programs can take a while to pay off. Socially responsible investment reduces investors’ risk exposure to environmental or regulatory crises and it supports businesses that have a positive benefit for employees, customers and the community. It’s not just about environmental sustainability; it’s about business sustainability.
Progressive change needs leadership with long-term vision and boldness, anticipating change, building from strengths and promoting a culture of innovation and entrepreneurship.
A Future Jobs Taskforce, which the council has called on the NSW and federal governments to establish and fund, can focus on our region’s unique strengths in clean energy, manufacturing, research and product development, health and education services, and sustainable food and tourism.