The financial crisis and negative member returns have sidelined many super funds’ plans to combat the risks of climate change, but commitments to factor these risks into investment portfolios is still strong, a survey from the Climate Institute and the Australian Institute of Superannuation Trustees (AIST) has found.
The majority of survey respondents (70 per cent) did not have risk management methods in place to calculate their exposures to carbon prices, and 78 per cent did not know the value of the low-carbon assets they owned, the survey found.
Only 9 per cent were attempting to measure the climate change risks, which range from the physical impacts on assets to the effects of government policies, in their portfolios.
But the survey found that most funds aimed to ramp up their ability to manage these risks.
As much as 95 per cent of respondents have altered, or plan to alter, mandates to funds managers to encompass climate change risks, and 85 per cent aimed to strengthen their ability to meet these risks through internal resourcing.
Of the 72 funds that received the survey, 31 responded, including the $59 billion Future Fund.
“Clearly super funds have a number of bases to cover when it comes to better managing climate risks…The same can be said about the extent to which they are moving on low carbon opportunities,” John Connor, chief executive officer of the Climate Institute, said in a statement.
Connor said that a range of industry and government reforms were needed to incentivise funds to better manage the risks associated with climate change ahead of short-term considerations.
Fiona Reynolds, chief executive officer of the AIST, said the results indicated that many super funds recognised the risks of climate change but were still grappling with ways of factoring them into their portfolios.
She said the financial crisis and diminishing member returns had been foremost among super funds’ priorities.
"Many funds are waiting in anticipation of regulatory certainty on the design of a carbon pollution reduction scheme," she added.
“We have some way to go before all funds… allocate significant resources towards climate change action.”
Most respondents (83 per cent) believed that trustees should be responsible for overseeing the management of the risks.
The survey was issued in 2008. Since then, the AIST and the Climate Institute released best-practice guidelines for super funds, asset consultants and funds managers, which aim to help them appropriately manage climate risks.