Despite super funds seeing climate change as an investment risk, a major Mercer survey has shown them to be waiting for the government to set a carbon price before taking action.
Strong European policies on carbon pricing and renewable energy were leading to much greater integration of climate-risk factors in the portfolios run by European institutions, according to Mercer’s Global Investor Survey on Climate Change.
The global survey covered Europe, North America and Australia-New Zealand, with a total of 44 asset owners (including 16 in Australia-NZ) and 46 asset managers (19 in Australia-NZ).
The 44-page survey is the inaugural report from the three regional investor groups: Europe’s Institutional Investors Group on Climate Change (IIGCC), North America’s Investor Network on Climate Risk (INCR), and Australia-New Zealand’s Investor Group on Climate Change (IGCC).
Of the 16 local respondents to the survey, the only Australian fund mentioned was the $37 billion AustralianSuper which, the report said, “intends to draw on the research to review its current asset allocation mix. Initially, they [AustralianSuper] will review and analyse the risks associated with changes to policy and physical impacts on their current assets”.
IGCC’s Nathan Fabian said that Australia’s lack of carbon pricing and an uncertain regulatory environment was “a concern”, but there was “an increasing focus from investors on policy advocacy”.
Some industry sources have questioned this assertion in the light of AustralianSuper’s negative vote in April at Woodside Petroleum’s AGM on the Climate Advocacy Fund’s resolution, which asked Woodside to declare its carbon-price assumptions.
The only Australian super funds to vote for the resolution – which was supported by the Australian Council of Superannuation Investors (ACSI) – were Cbus, HESTA, LGS (all of which were in the Mercer survey) and MTAA Super.
Speaking with I&T News’ sister publication, Investment Magazine, last month about the reason for voting against the carbon-price disclosure motion, AustralianSuper’s senior manager of investments, Peter Curtis, said the fund was advised by ACSI, funds managers, and another ESG research provider.
“After reviewing the recommendations of all of the above the outcome was that we do not consider a change to the company’s constitution appropriate for the outcome the resolution is seeking, particularly, if there is a risk that commercially sensitive information could be released,” Curtis said.
“As investors, we always seek greater disclosure, but separating out carbon disclosure in this way may not be the best way to achieve this goal. We feel there are other mechanisms better suited [such as] continued support of the carbon disclosure project [and] direct engagement with company.”