The FSC and its fund management members are now focusing on the transition to a lower emissions economy through the FSC Guidance by setting expectations for the industry in regards to net zero targets, labelling investment products and fulfilling their legal obligation to disclose climate-related risks.
Blake Briggs, CEO of the FSC, said that the Australian funds under management industry “takes the challenge of climate change seriously,” as well as its role in “allocating capital to facilitate the transition to a low carbon economy.”
“The Glasgow Financial Alliance for Net Zero estimates $4.5 trillion USD a year from 2026 is required to transition the global economy to net zero by 2050,” Mr Briggs stated.
“Investment funds are playing a vital role in this economic transition by working with their portfolio companies to adopt lower emissions practices.”
Mr Briggs referred to the guidance as a “signal to government, regulators and consumers” and further stated that the Australian investment community considers acting on climate change risk as a top priority as they take on a “leadership position on emissions reduction and meeting net zero targets.”
“The FSC wants consumers to have confidence fund managers who set net zero targets are assessing their portfolios with robust science-based methodology and are working with companies they invest in to reduce emissions,” Mr Briggs said.
The FSC guidance lays out principles for Australian fund managers to guarantee climate-related disclosures to consumers are precise and reinforced by clear evidence.
The guidance covers several areas such as; setting net zero targets for investment portfolios, with a focus on assessing emissions in those portfolios; the vital considerations when labelling funds in order to avoid climate greenwashing and; ensuring that reporting on climate risk aligns with the Taskforce on Climate Related Financial Disclosures.
The new guidance follows the release of guidelines intended to help combat climate change and greenwashing by ASIC back in June 2022, where an FSC policy manager warned that there may be an inadvertent effect on disclosure expectations and may lead to misunderstandings of investment practices that are typically accepted by investment managers.