Industry superannuation fund Cbus says the carbon tax will lay down clear expectations to its external funds managers to make a thorough analysis of the impact of the new carbon price on their portfolios.
“They’ve really got the data to now crunch the numbers about what impact it’s going to have on the profitability or otherwise of those companies [they are investing in],” says Louise Davidson, Cbus ESG investment manager.
She says Cbus, which manages slightly less than $17 billion in assets, is satisfied with the detail of the carbon tax because it provides enough certainty for funds to make more informed decisions about the impact of carbon pricing on their portfolios.
The carbon tax will be a flat charge of $23 for each tonne of emissions levied on Australia’s top 500 polluting companies. In 2015 the tax will be replaced with a market-driven system: the Emissions Trading Scheme.
In the long term, Davidson expects a carbon price will lead to changes in investment portfolios “because ultimately it will increase the attractiveness of some types of investment[s] and decrease the attractiveness of others”.
However in the short-term Davidson doesn’t see any big changes to Cbus’ portfolios because the initial carbon tax will exert a “modest” impact. But she expects it to force funds managers to consider how the prices of individual assets could change.
The Australian Institute of Superannuation Trustees (AIST) welcomes the carbon pricing scheme and predicts it will lead to greater investment in clean energy and technology.
Fiona Reynolds, AIST CEO, says the new scheme is a prudent reform that will provide long-term policy stability for super funds.
“Uncertainty has been the killer [for] innovation in this area,” says Reynolds.
The back-and-forth discussion about the carbon tax has caused funds to defer making hard decisions about sustainable investing.