Super funds on the cusp of climate action
Superannuation sector efforts to address climate change risks are accelerating in Australia, according to a new report about Australia’s 20 largest licensed funds.
The report found one-fifth of superannuation organisations studied have, in the past three months, publicly stated their intention to achieve net zero emissions across their investment portfolios by 2050, an indication of growing momentum in the sector.
Prepared by ClimateWorks Australia with the Monash Sustainable Development Institute, the report notes that three funds – Cbus, HESTA and UniSuper – have announced a net zero emissions by 2050 target across all of their investment portfolios.
It assesses these targets as ‘fully aligned’ with the Paris Climate Agreement, which aims to keep global warming to well below two degrees Celsius.
A fourth fund, Aware Super (First State Super), has said it will seek to transition to net zero by mid-century, but has not committed to an explicit target.
Twelve superannuation organisations – or 60 per cent of those assessed – were engaged in a range of activities to reduce portfolio emissions intensity but were not yet aligned with net zero by 2050.
Twenty per cent have disclosed no specific portfolio emissions reduction commitments or activities.
ClimateWorks Australia CEO Anna Skarbek says that recent announcements reflect increasing momentum internationally from leading investors.
Ms Skarbek acknowledges that, until recently, the superannuation industry had lagged behind other sectors.
Many funds, she says, remain hesitant to set a net zero portfolio target, due to a lack of clarity around how they will achieve it.
“In 2018, superannuation funds owned almost half of Australia’s shares; by 2040, experts suggest they will own 60 per cent of ASX-listed equity. That means the decisions they make matter enormously to the rapid decarbonisation of the Australian economy,” she said.
The report indicates that, despite the economic repercussions of the COVID-19 pandemic, the superannuation sector is increasingly addressing climate risks.
Are you happy that super funds are starting to finally take action on climate change? Should they be doing more? What targets would you like to see?
They'd better speed things up because lawyers will be laughing all the way to the bank if Mark McVeigh wins his case against Retail Employees Superannuation Trust, as it will set a precedent. Mark is asking his super fund to provide him with disclosure about what it was doing to mitigate climate-change-related risks. He alleges REST has failed to protect his retirement savings from the financial devastation that will flow from climate change.
I hope he wins because it’a win for all of us - super fund trustees have a legal duty to consider climate change as a material risk to long term investment performance.