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Super funds can play ‘critical role’ in push to net zero

By Fergus Halliday
3 minute read

Transparency and accountability might be just as important as returns as the super sector embraces ESG investing.

One of Australia’s largest super funds is looking to set an example when it comes to reducing their carbon footprint.

Aware Super CEO Deanne Stewart said that it has never been more important for Australia’s private sector to provide transparent information about their emissions reduction targets.

“We know that climate change is one of the most significant long-term financial risks to our portfolio and our members’ financial security," Ms Stewart said.

She argued that Aware Super has been responding to the risks and opportunities presented by the climate crisis for years, “with recent performance demonstrating that taking decisive action on climate change is not only good for the community but also delivers better retirement outcomes for our members”.

Pointing to the fund’s recent and inaugural Destination Net Zero Report and Stewardship Report, Ms Stewart said that Aware Super is already moving to prepare its portfolio for a low-carbon future.

According to her, this means more than just delivering returns for members.

“It’s also important for us to keep ourselves accountable to our climate change targets by regularly reporting on progress, ensuring we are held to the same standard of transparency that we hold the companies we invest in,” Ms Stewart said.

Aware Super has already committed to achieve a 30 per cent emissions reduction in listed equities portfolio by 2023, a 45 per cent emissions reduction in its portfolio by 2030 and net zero by 2050.

The first of these three milestones has been achieved ahead of schedule.

Aware Super’s recent move to divest from thermal coal mining over the last 12 months brought with it a 45 per cent reduction in carbon emissions from the fund’s listed equities portfolio, plus an 18 per cent return for members.

In the company’s Destination Net Zero Report, Aware Super detailed their rationale for doing this, and noted that sectors facing similar risks may meet the same fate.

“We will continue to assess the presenting transition risks in other fossil fuel-related industries, including oil and gas producers and power generators,” the report noted.

Beyond just divesting away from carbon-intensive industries, Ms Stewart emphasised the importance of the role that funds like Aware Super can play in engaging companies and influencing positive and lasting change.

She said that Aware Super has held over one hundred engagements across 30 companies to get a sense of their climate transition strategies over the past year.

“Through collaboration and engagement, we can deliver a cleaner, brighter future for all,” she said.

More direct investments are also important, with Aware Super having committed $1 billion to renewables and low-carbon technology over the past 12 months.

Ms Stewart argued that super funds can, and should, play a critical role in Australia’s climate change transition.

“We’re already doing our part and will continue to step up to ensure that we are delivering our members, and community, a better financial future,” she said.