Action on climate change: Committing to net zero carbon emissions by 2050

28 April 2022
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 2.64 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 goals of the Paris Agreement and a net zero 2050 economy.  These actions involve managing climate change risks and taking opportunities to achieve the goals of the Paris Agreement to limit global warming to well below 2 degrees Celsius, preferably to 1.5 degrees, by 2100.

 

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 167 companies Climate Action 100+ focuses on account for 80% of the world’s GHG emissions. We have also identified the top contributors to emissions in our equities, infrastructure and property portfolios.

As an investor of more than $261 billion in assets that touch many parts of the global economy, AustralianSuper has a major role to play in supporting the net zero economic transition necessary to manage climate change risks and opportunities in the portfolio.

AustralianSuper is taking substantial actions to support the net zero 2050 goal of the Paris Agreement.

 

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.

1. Investment         

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 invest more than $2 billion in 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.

In recent years, as we’ve invested more into international markets, the equities portfolio has lowered its carbon intensity. For example, the carbon intensity for our equity portfolio has fallen by 41% between 2013 and 20202.

2. Stewardship

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 700 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 second TCFD-aligned Climate Change Report, which includes metrics on how we’re managing the transition to a net zero portfolio and managing physical risks in the portfolio.

 

DOWNLOAD: NET ZERO 2050 REPORT (PDF)

 

 

Transparency – see where your money is invested

What super funds invest in is becoming of increased importance to members. We believe it’s important to be transparent with members about your investments and how we manage them, and understand it can be challenging to see exactly where your money is being invested.

AustralianSuper is the first Australian superannuation fund to publish a full list of our investments, which we’ve been doing since June 2016. This is a voluntary disclosure by the Fund, and is at the forefront of investment disclosure among industry peers, in terms of its depth of detail and transparency.

SEE WHAT YOU’RE INVESTED IN

 

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.

DOWNLOAD: CLIMATE CHANGE REPORT (PDF)

 

Source:
1. Climate Council – What does net zero emissions mean?
2. S&P Global/ Trucost ESG Analysis, Australian and international equities portfolio data, 30 September 2013-2020. Carbon to value invested: C02 emissions per AUD million invested. 

 

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. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/tmd. AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.


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