Aware Super, IFM Investors and QIC are among a group of institutional investors supporting a new 10-year private sector-focused initiative aiming to drive a plunge of 230 million tonnes in Australian emissions by 2030.
The scheme, Climate League 2030, launched on Wednesday, with the backing of 16 investors managing more than $850 billion in assets collectively.
Climate League 2030 has asked its participants to support efforts to drive a further reduction in greenhouse gas emissions of at least 230 million tonnes on top of what is already projected for the end of the decade, approximately 45 per cent lower than 2005 levels.
It is also planning to pledge one new action each year under three themes: integration of Paris emissions reduction goals into investment policies or business strategies, collaboration between investors, clients and companies to deliver emission reductions, and investment in new technology and other products and measures that reduce Australian emissions.
The Investor Group on Climate Change (IGCC) is coordinating the effort, with other participants including AustralianSuper, Aberdeen Standard Investments, Australian Ethical, Cbus, HESTA, Impact Investment Group, Lendlease Funds Management, Local Government Super, Pendal, UniSuper and the Victorian Funds Management Corporation.
The participants will be able to devise their own actions under the scheme, but they will be held to account for reporting how they have driven absolute emissions reductions in Australia.
A number of actions already registered include portfolio-wide emissions goals of up to 45 per cent by 2030 and net zero by 2050, engagement programs seeking action from companies and investment targets for renewables and other technology.
IGCC is aiming to publish a progress report on the collective’s efforts in late 2021.
Aware Super chief executive Deanne Stewart said the fund is pushing for other investors and businesses to “stop talking” and take action to support the transition to a low carbon economy.
“To really shift the dial and achieve lasting action to halt the potentially devastating impacts of climate change, it is critical businesses, investors and governments alike set and deliver on transparent, meaningful and measurable targets and goals,” Ms Stewart said.
“We know that climate change poses the most significant financial risks and opportunities to Aware Super’s portfolio in the long term, and more importantly to our members’ future economic security.”
The IGCC reported Climate League 2030 has looked to build off other successful private sector-focused initiatives for emissions reductions, such as We Are Still In and We Mean Business in the US and the Climate Leaders Coalition in New Zealand.
UN special envoy on climate action and finance Mark Carney (who also is a former governor of the Bank of England) commented the Australian pension industry, as the fifth largest in the world, holds significant influence over companies.
“This is especially important as achieving net zero emissions by 2050 will require a whole-of-economy transition and every company, bank, insurer and investor will be part of that,” Mr Carney said.
“The investment and innovation necessary for this shift will also create the greatest commercial opportunity of our time and support a post-COVID green economy.”
Climate League 2030 has opened with institutional investors, but it will invite banks, insurers and other companies to take part in the coming months.
IGCC chair Stephen Dunne noted the private sector has an important role to play in meeting the “national climate change challenge”.
“Listed companies are responsible for 40 per cent of Australian emissions, while infrastructure has been connected to 70 per cent of domestic greenhouse gas pollution,” Mr Dunne said.
“Through our universal ownership and management of equities, fixed and other assets, investors can help ensure real-world emissions reductions through our portfolio decisions, management and company engagement.”
IGCC CEO Emma Herd referred to the group’s recent modelling showing $63 billion in new investment opportunities could be created over the next five years if the country aimed for net zero by 2050.
“Responding to climate risk with practical action will help our nation deliver on the ambition and goals of the Paris Agreement, and represents responsible economic management for our country, given what is at stake,” Ms Herd said.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
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