Finance Finance News Australian superannuation investors join $US26 trillion climate change initiative

Australian superannuation investors join $US26 trillion climate change initiative

Carbon targets.
Companies will be pressured to reduce carbon in their supply chains. Photo: Getty
Twitter Facebook Reddit Pinterest Email

A raft of multi-billion Australasian investment groups have joined a $US22.6 trillion ($34.36 trillion) global initiative to drive climate change action among the world’s top 100 carbon emitters, responsible for 15 per cent of global emissions.

Australian giants to be targeted by the measure include BHP, Rio Tinto and Wesfarmers, which mines coal and owns retail groups Coles and Bunnings. They will be pressured by investors to take action against carbon emissions in their businesses.

More than 200 of the world’s biggest investors have signed up to the initiative, known as Climate Action 100+, which is being launched in Paris on Tuesday evening Australian time. It marks the second anniversary of the singing of the Paris Climate Change agreement in 2015.

Membership includes Australian investment giants Australian Super, AMP Capital, VicSuper, First State Super, Hesta and Cbus.

International members include US pension giant CalPERS, HSBC Global Asset Management and Sumitomo Mitsui Trust Bank.

The full list of companies under scrutiny is here and the full list of investor members is here.

Commenting on the launch, Emma Herd, Chief Executive Officer of the Investor Group on Climate Change said: “This project puts companies on notice that investors expect real action on climate change. Through Climate Action 100+, investors hope to move companies to go further, faster, when it comes to managing climate change risk and developing low carbon opportunities.”

A spokesperson for Wesfarmers told Fairfax Media: “Wesfarmers regularly engages with investors on this issue and will continue to do so. As a group, we strive to reduce the emissions intensity of our businesses and improve their resilience to climate change.”

Andrew Gray, Senior Manager, Investments Governance at AustralianSuper and member of the Climate Action 100+ Global Steering Committee said: “In a few short months, a substantial community of institutional investors have coalesced around this initiative to signal to companies that they will be holding them accountable to align their business plans to the Paris Agreement, increase disclosure and improve governance to address a significant investment risk.”

Matt Whineray, Chief Investment Officer of the NZ Super Fund said: “The Climate Action 100+ initiative is a significant step forward in active ownership by investors concerned about climate change investment risk. Engagement is a core part of the NZ Super Fund’s climate change investment strategy and our involvement in this project provides a clear signal to the companies we invest in that we expect them to understand and manage climate change risk.”

David Atkins, Chief Executive Officer Cbus said: “Companies and investors have a shared responsibility to facilitate an orderly and just transition to a climate resilient economy. Through this initiative, investors will set clear expectations and we expect companies will step up and respond accordingly.”

Investors will ask companies to take the following action:

  1. Implement a strong governance framework which clearly articulates the board’s accountability and oversight of climate change risk.
  2. Take action to reduce greenhouse gas emissions across their value chain, consistent with the Paris Agreement’s goal of limiting global average temperature increase to well below 2 degrees Celsius above pre-industrial levels.
  3. Provide enhanced corporate disclosure to enable investors to companies’ business plans against a range of climate scenarios, including holding emissions well below 2-degrees Celsius and improve investment decision-making.