United Nations Special Envoy on Climate Action and Finance, Mark Carney

News from the front desk, issue 501: We called someone in NZ this week to canvass a new project on embodied carbon we’re running. Even though we’ve barely started to digest the massive 127 ebook we just published on net zero and operational energy.

What surprised us, and the contact we spoke to, an architect, was the appetite that seems to be emerging for this still largely arcane topic. The architect’s clients, he said, don’t know much about it but their appetite to find out how to lower their embodied carbon, and the metrics to get there, has been a surprise. It’s like 2020 has shaken people awake and they’ve realised we’re running out of time, he said.

Perhaps it’s something to do with the vision we’re getting on our screens on a daily basis of the latest major glacier to melt into the ocean, or the fires in California, or what happened here last summer.

So it’s good to see the big corporates continuing to fall into what’s looking more and more like a green avalanche.

Nuveen, an outfit we wrote about recently for its challenging work with Built to tackle a challenging refurbishment of an existing building (the best embodied carbon savings of all), lead the way. This is a massive US$1 trillion empire that has decided to go “global excellence in climate reporting”.

It’s been patted on the back by UNPRI (Principles for Responsible Investment), alongside seven Aussie companies we praised last week for blitzing the same awards.

Nuveen is one of only four US-headquartered investment firms named to the Leaders’ Group.

Announcing the win, chief executive officer of Nuveen, Jose Minaya, said “climate risk is financial risk”.

“We have a firm-wide strategy to tackle climate risk across all of our investment portfolios and we continuously report on our activities in alignment with industry recognised standards,” he said.

Better still the company is working with experts and pioneering data providers” to quantify and analyse the risk, with a big focus in real estate and real assets, “where the assets can significantly contribute to climate change – for example, through carbon emissions – and where the world is already feeling climate change’s physical risks, such as extreme weather and rising temperatures.”

Well said, Nuveen.

More good news on the home frontcame from the Australian Government (fanfare please) which threatened to kill off the Australian Renewable Energy Agency (ARENA) but then reprieved it somewhat.

The PM Scott Morrison has handed it another $1.9 billion to reduce carbon emissions but with the proviso to indulge the old fossil fuellers’ favourite technology of carbon capture and storage. As coal fades from the parliamentary vernacular hopefully we see this technology turn to more the more critical role of extracting carbon from the atmosphere. Trees will do that but they grow slowly and burn fast.

ARENA will also be directed to hydrogen technologies, an energy source gaining loads of traction but probably not for buildings – for a range of reasons that were explored at our Flick the Switch event – and other politically palatable ventures such as reducing energy bills.

There’s $12 million, for instance, that will go to a “hotel uplift program,” “which could include money for regional pubs to upgrade their air-conditioning or refrigeration to be more energy efficient”.

A lower figure, but more exciting in terms of impact, was the $708,910 that the agency has directed towards Frasers Property Australia to build 51 medium density energy efficient homes at Ed.Square. See the ebook Flick the Switch for more news on Frasers Property ambitious all electric apartment strategies.

The point of the investment for ARENA is to “demonstrate the feasibility of achieving zero energy demand homes at scale”.

It’s part of the $1.42 million project to “integrate a suite of renewable energy, electrification and energy efficiency measures including 4 kW of solar PV per dwelling, ground source heat pump space conditioning, induction cooktops, electric boosted solar hot water, low-e glazed windows, LED lighting and roof insulation”, Frasers Property Australia said. 

The company will use the data to assess whether such features are now a selling point. But it needs to take a glance over at Stockland, which is considering putting sustainability in as a standard and challenging people to opt out… if they dare.

This is all a big departure from ARENA’s former remit around renewables, which the government says are now doing just fine in Oz, with “over $30 billion invested since 2017.” So no need for more help apparently, no thanks of course to at least some of Morrison’s predecessors and his own tired outdated rhetoric. But let’s not look backward folks, let us look to rescuing the future we want from.

Also on the local stage the big story this week was how institutional investors with more than $850 billion in Australian assets under management have formed a “Climate League” to back deeper emissions reductions for Australia.

Thank you, the Investor Group on Climate Change, which is making the magic happen.

One of the group, Cbus chief executive Kristian Fok, cited the bushfires in Australia and the US when he said, “Climate change is one of the most significant long-term risks facing our members’ retirement savings.”

Generous encouragement from the former Governor of the Bank of England and current United Nations Special Envoy on Climate Action and Finance, Mark Carney, (a favourite poster child of ours) who reminded these investors a great deal of power to influence outcomes, will clearly help.

Members of this cool club include Aware Super, IFM Investors, the Queensland Investment Corporation, Aberdeen Standard Investments, AustralianSuper, Australian Ethical, HESTA, Impact Investment Group, Lendlease Funds Management, Local Government Super, New Forests, Pendal Group, Pollination, UniSuper and the Victorian Funds Management Corporation.

IFM joined CbusUniSuper and HESTA, as well as big companies like BHP and Telstra, numerous countries around the world, and every Australian state and territory – though not the federal government – in committing to net zero emissions by 2050,” The AFR wryly noted.

And for those who are on the outer, like Rio Tinto, there are no bouquets, only brickbats.

Morningstar this week noted that “leading Australian boutique investment manager Ausbil has used the Morningstar Investment Conference to explain why they dumped Rio Tinto from their $30 million sustainable equity fund.”

It’s a shame that others haven’t followed, with “several large ESG managers” choosing to stick with the miner after its destruction of the Juukan Gorge. Why? Do we need a board of shame?

But sustainability is soaring nevertheless. A report by Morningstar’s Grant Kennaway and Peter Gee said that while sustainable investing is still just fraction of the Australian market, sustainable investment products have increased at a rate of one a month in 2020, and retail assets jumped 21 per cent for the year to June 2020 taking them to $19.9 billion.

“There is a new wave of investors around the world who have intertwined their personal views and beliefs with their investment decisions.”

What’s still missing is better disclosure. Interestingly, the authors say that Australia’s record on this among the worst in the world.

“It’s disconcerting, for a country that aspires to be considered a financial centre, to have the world’s worst practice in regard to portfolio holdings disclosure (for investment products),” the authors said.

“If investors want to avoid exposure to fossil fuels, for example, Australian investors need portfolio holdings data (what stocks a fund holds) to provide the transparency that investors deserve.”

Ummm that’s kind of obvious and surprising that it’s not the case.

Now if you, dear reader, have insights to why this is so and how we can change this please let us know. Drop us a line or an entire OpEd (700+ words) Editorial@thefifthestate.com.au

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