AustralianSuper has made a commitment to achieve net zero carbon emissions by 2050 in the investment portfolio. This is in line with international scientific consensus on reducing the economic and social impacts of climate change. It's consistent with our objective of helping members achieve their best possible retirement outcome.
Managing the transition to a net zero 2050 portfolio
Climate change is one of the most significant investment issues facing investors today. Climate related risks will impact all economies, asset classes and industries, as well as societies and the physical environment. Managing the investment portfolio to net zero by 2050 is in members’ best interests given the risk climate change presents to the Fund’s long-term investment performance.
On members’ behalf, we’re a large investor in all segments of the global economy and have large ownership stakes in many companies. Our actions enable us to have a large impact on the low carbon transition in the investment portfolio and the broader economy.
AustralianSuper supports the goals of the Paris Agreement on climate change, which aims to limit global warming to well below 2 degrees by 2100. Our net zero 2050 target is consistent with the scientific consensus of reductions required to meet the goals of the Paris Agreement as outlined by the Intergovernmental Panel on Climate Change (IPCC).
AustralianSuper has a comprehensive plan and the transition to net zero 2050 is already well underway. The carbon intensity in the Australian and international shares portfolios has reduced by 44% between 2013 and 20191.
We’re taking significant actions to ensure we actively manage the risks and opportunities of climate change and continue to deliver strong long-term investment performance. These activities include targeted and comprehensive direct company engagement, portfolio emissions analysis, our work as a founding member and previous chair of Climate Action 100+, active voting on shareholder resolutions and collaborations with other investors to amplify our impact.
AustralianSuper currently invests in a range of renewable energy projects across markets. We plan to have investments of over $1 billion in the sector by the end of 2022. We expect this allocation to increase over time.1. Source: S&P Global/Trucost ESG Analysis. Portfolio data at 30 June 2013, 30 September 2015–2019. Carbon to value invested: C02 emissions per $million
Making progress on reducing our carbon footprint
We measure how we’re transitioning to a low carbon economy. The latest results* show how our global shares and fixed interest portfolios emit less carbon than the market index.
AustralianSuper’s carbon intensity is lower than the market
Our carbon intensity is falling over time**
* Portfolio data at 30 September 2019.
**Portfolio data at 30 September 2015, 2017, 2019.
Source: S&P Global/Trucost ESG Analysis. Market indices: International Shares – MSCI ACWI ex AUS Index, Australian Shares - S&P/ASX 300 Index, Fixed Interest - Composite Index: 50% S&P Australia Aggregate Bond Index & 50% S&P Global Developed Aggregate Ex-Collateralised Bond Index. Carbon to revenue (C/R) calculated by dividing the apportioned CO2e by the apportioned annual revenues for Direct and First Tier Indirect Emissions.
The asset allocation and other investment information are current as at the dates shown. AustralianSuper may change asset allocations and investments from time to time to suit market circumstances.
How AustralianSuper influences change
We have a comprehensive ESG & Stewardship program where we:
- Integrate climate change considerations throughout our investment process across asset classes
- Regularly engage with companies, and vote, on
issues that ask them to:
- Set long-term science-based emissions targets aligned to the Paris Agreement and a net zero 2050 economy.
- Understand climate change and carbon risks and have appropriate risk management strategies in place.
- Publish climate change information, such as the Taskforce on Climate-related Financial Disclosure frameworks (TCFD) so we can make informed investment decisions.
- Are a joint founder of Climate Action 100+, the world’s largest investor initiative seeking emissions reductions from the world's largest carbon emitters
- Actively consider climate change related shareholder resolutions on which we vote, supporting those we believe are effective in achieving a low carbon business transition and/or will result in improved disclosures on climate change.
Investing in renewables and the new economy
Transitioning to a low carbon economy means investing differently.
Over the last five years, we’ve been investing more in new economy sectors, like IT, healthcare and biotech, communications and fintech. We’ve also increased our investments in overseas markets, where there are more opportunities in these sectors. As at 31 December 2019, we invested around 40% of our international equity portfolio in new economy sectors.
Within the energy sector, we currently have plans to invest up to $1 billion in renewables via our equity and infrastructure portfolios and expect this to grow over time. We also hold lower emission transition fuels, like gas.
As the transition progresses, carbon emissions in the portfolio will fall as new technologies are developed and companies transition their businesses to a lower carbon economy. You can see this happening already in our carbon intensity results.
By managing the transition in a smooth and orderly way over time, we can continue to deliver the best investment outcomes for members.