Around the world the impetus is growing for post Covid economic recovery strategies to focus on projects that reduce carbon emissions.
The collective power of investors has the potential to fast track the process.
FLICK THE SWITCH: Institutional investors, globally, have been actively divesting fossil fuels for some time and there are signs this is accelerating. Norway’s $1 trillion sovereign wealth fund last year divested more than $13 billion worth of fossil fuel related investments, and BlackRock, the world’s largest asset manager, announced in January it would remove thermal coal companies as part of a broader climate change strategy.
In Australia institutional investors such as super funds are following suit. This is driven partly by demand from their members but mostly by their fiduciary duty to protect members’ money and avoid stranded assets.
According to Martijn Wilder, founding partner of climate change advisory and investment firm Pollination and chair of the Australian Renewable Energy Agency, ARENA, super funds’ appetite for low carbon investments is intensifying.
It’s where future growth, and hence stronger returns, will be.
“All super funds are looking at divestment,” says Wilder. “They see it as very important and don’t want to invest in an asset that can become stranded – that’s the key issue.”
Industry funds such as Cbus Super, HESTA and First State Super have all announced decarbonisation strategies and investment in more sustainable assets.
Cbus Super has set carbon neutral targets for its property portfolio and is looking to set similar goals for its infrastructure assets before applying them across the entire portfolio by 2050, while HESTA recently announced its divestment from thermal coal.
Super funds decarbonising
In January, First State Super released its updated portfolio transition plan aimed at reducing the carbon footprint of its $100 billion fund. The fund, which has a large key worker base, has been partnering with property developers to invest in sustainable affordable housing and retirement villages… Read the rest of this article
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