Australian superannuation funds have fared well in the Asset Owners Disclosure Project (AODP) Global Climate Index, a league table that ranks global pension, superannuation and sovereign wealth funds by their demonstrable levels of low-carbon investment, transparency and risk management.
Of the top 30 asset owners ranked on the index, 11 are based in Australia, with the first, third and fifth rankings going to Local Government Super, CareSuper and Cbus Super respectively. A further three Australian funds - VicSuper, UniSuper and AustralianSuper - were included in the top ten.
"Australia is clearly a standout performer in the index," said an AODP report commenting on the index. "Disclosure disciplines appear more embedded in Australia than elsewhere."
Dutch pension fund Stichting Pensioenfonds Zorg en Welzijn (PFZW) and Canada's British Columbia Investment Management Corporation rounded out the top five, with asset owners from Norway, Germany, Sweden, Finland, Denmark, Switzerland, Singapore, the UK and US also included in the index top 20 rankings.
At the other end of the index, Japan was singled out for high levels of non-disclosure. "Banks in Japan are notoriously opaque and the surveyed pension funds failed to produce any meaningful disclosure, despite having the second largest pension system in the world," the report states.
Despite the relatively positive showing by Australian super funds, the AODP - a not-for-profit organisation associated with the Climate Institute - has called for asset owners to lift their commitment to low-carbon and environmentally sustainable investment, and to increase transparency.
In a teleconference expanding on the Global Climate Index findings, the AODP's executive director, Julian Poulter, said super funds and their members are at significant risk of being negatively affected by future carbon reduction regulation and subsequent market impact.
"Eventual regulation is as certain as the climate science," Poulter said. "Super funds can't afford to wait for government panic-action - and have an obligation not to."
A lack of investment in low-carbon investments and preparation for potential future regulatory requirements could lead to a "systematic crash" akin to the sub-prime mortgage crisis, Poulter added. In order for them to survive any potential crash, super funds need to "become more accountable and give their members more information about their investments," he said.
The index launch follows the conclusion of talks at the UN Climate Change Conference in Doha, Qatar, on Saturday 8 December. Ahead of the conference, an alliance of organisations allegedly representing institutional investors responsible for US $22.5 trillion, wrote an open letter to world leaders calling for "more decisive action" on climate change, so as to protect against uncertainty in the market.
