Climate change is having an impact on economies, companies and communities around the world, which has a flow-on effect to investments. As Australia’s largest industry super fund, AustralianSuper has a duty to all 2.34 million members to manage their investments responsibly.
Building on the actions we’re already taking to manage climate change risks, we’re proud to announce our commitment to achieving net zero carbon emissions in our investment portfolio by 2050.
At AustralianSuper, we support the global scientific consensus that climate change is having significant physical, social and economic effects. To offset the risk of economic impact on investments, we’re taking substantial actions to support the net zero 2050 goal of the Paris Agreement. These actions involve managing climate change risks and taking opportunities to achieve strong long-term investment returns, so members can get their best possible retirement outcome.
What net zero emissions mean for AustralianSuper members
We look forward on members’ behalf to make sure that risks are minimised and opportunities are maximised, to achieve the best long-term returns.
Reaching net zero emissions in the investment portfolio means achieving an overall balance between greenhouse gas emissions (GHG) produced and GHG emissions taken out of the atmosphere1. For AustralianSuper, achieving this balance means reducing our investment portfolio carbon intensity to a net zero level by 2050.
The steps to achieve this include transitioning away from high-carbon investments, such as fossil fuels, and toward renewable investments such as wind and solar. This is consistent with the transition occurring globally.
It also means influencing the way companies operate so they emit less carbon in their business operations. This requires changes to businesses processes, such as energy efficiency, fossil fuel usage, transport, industrial processes and product use. We influence this through our direct company engagement and collaborative initiatives like Climate Action 100+ and the Australian Industry Energy Transition Initiative.
Reducing emissions and transitioning to net zero by 2050
To meet the net zero 2050 goal, AustralianSuper has undertaken significant analysis – both independently and through Climate Action 100+.This helps us to understand the emissions profile in both the economy and investment portfolios. It also focuses on our actions, so we can have a greater influence on climate change outcomes.
For example, the 161 companies Climate Action 100+ focuses on account for 80% of the world’s GHG emissions. We have also identified 10 companies that account for 70% of the emissions in our Australian equity portfolio.
As an investor of more than $188 billion in assets that touch most parts of the global economy, AustralianSuper has a major role to play in influencing the transition necessary to manage climate change.
4 pillars of AustralianSuper’s net zero 2050 transition
Our comprehensive net zero transition program includes a broad range of portfolio emissions reduction activities, which are conducted across 4 pillars. This approach is tailored to the nature of ‘risk’, and our investment process for each asset class. By managing the transition in a smooth and orderly way, we aim to deliver the best retirement outcomes for members.
As a large investor, AustralianSuper can lower carbon intensity by investing more in lower emissions companies, such as those in the renewable energy sector. We currently have a range of renewable energy investments, including:
- Generate Capital – a San Francisco based investment platform specialising in distributed energy and sustainable infrastructure.
- Quinbrook Investment Partners – an infrastructure manager focusing on US, UK and Australian renewable energy, with significant opportunities in US solar, wind and battery investments.
- National Infrastructure Investment Fund (NIIF). NIIF’s key focus is on investing equity capital in India’s core infrastructure sectors: transportation, energy and urban development, with a large focus on the renewable energy sector, particularly wind and solar.
Over the last 5 years, we’ve also increased investments in low-carbon intensive sectors, particularly in international equity markets. Between 2017 and 2019, our international equity portfolio doubled its carbon efficiency. We plan to have investments of over $1 billion in the sector by the end of 2022.
We use our influence as a large asset owner to encourage companies to adopt net zero business strategies and actionable progress plans that track emissions reduction. For our core portfolio of internally held equities, we have developed ownership plans to monitor and manage progress for climate exposed companies. AustralianSuper also influences voting on company and shareholder resolutions that encourage organisations to:
- Set long-term science-based emissions targets aligned with 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.
AustralianSuper is also a founding member of Climate Action 100+, which collaborates with more than 440 global investors to promote positive change in the world’s largest carbon emitters.
3. Collaboration and advocacy
AustralianSuper actively supports peak climate change organisations, including the Investor Group on Climate Change (IGCC) (Australia), Institutional Investor Group on Climate Change (IIGCC) (Europe) and the United Nation’s Principles of Responsible Investment (PRI).
We’ve been a signatory to PRI since 2007, and have been awarded an A+ rating for our Overarching Approach to Responsible Investment in the PRI Global Assessment Report 2020.
4. Measurement and reporting
We’re also advocates for the adoption of improved climate change reporting, such as the Taskforce on Climate-related Financial Disclosures frameworks (TCFD) . AustralianSuper has published its own TCFD-aligned Climate Change Report, which includes metrics on how we’re managing the transition to a low-carbon portfolio and managing physical risks in the portfolio.
Keeping you informed
We will continue to measure and report on the low-carbon transition progress in our portfolio on our website and in our climate change report.
1. Climate Council – What does net zero emissions mean?
Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns.
This information may be general financial advice which doesn’t take into account your personal objectives, situation or needs. Before making a decision about AustralianSuper, you should think about your financial requirements and refer to the relevant Product Disclosure Statement available at australiansuper.com/pds. AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.