Qantas Super will allocate $2 billion across two investment managers to target net zero carbon emissions for its portfolios by 2050.
The 83-year-old not-for-profit corporate fund, with $8.5 billion in assets under management for its 27,000 airline staff members, will place $1 billion each with Calvert Research and Management, part of Morgan Stanley’s asset management division, and Goldman Sachs Asset Management to reduce carbon intensity across its Australian and global equity portfolios.
Chief investment officer Andrew Spence said the move was in line with the fund’s outsourcing model with Calvert having one of the most established environmental, social and governance (ESG) investors with 40 years’ experience.
“Our belief is based on the view that we want to hire and retain the best,’’ Spence said.
The fund hopes to achieve its target in three phases, the first is a 24 per cent reduction in carbon emissions from a June 30, 2020 baseline, across its portfolio by 2025.
“We recognise there’s more we need to do … we believe (ESG) factors increasingly impact investment returns and risks, and contribute to us delivering sustainable growth to our members,’’ Spence said. “That’s why we embedded sustainability as one of our core investment beliefs in 2015.”
Spence would not comment on the recovery of member inputs as Qantas staff returned from Covid-affected travel, but said the fund’s actively managed portfolio had delivered strong performances for members.
Its default option, Glidepath:Take Off growth investment, was rated the best default fund performer in one, three and five years, according to a March 31, SuperRating survey.
The option climbed 26.9 per cent in value in the year to March 31, 2022, following more than 10 per cent growth over three and five years. Spence attributed the performance to active management.
Performance credited to active management
“A large proportion of our portfolios are actively managed. There’s a lot of volatility in markets and beta generally is not doing well. Having a high active management percentage that’s the key … we have a nimble approach,’’ he said.
The fund expected investment opportunities with new and existing businesses adapting to decarbonize but there were also risks if action was not taken to understand and manage climate change issues.
Partnerships with Calvert and Goldman Sachs form part of a range of sustainable investments that Qantas Super has made recently, including the Fund’s backing of the Taronga Ventures’ build environment technology fund, RealTech Ventures I in February. The venture capital fund will target sustainable, real estate, energy and infrastructure investments.
Qantas Super has also moved to exclude tobacco manufacturers, cluster munitions and anti-personnel mine whole weapon systems makers in its portfolios and has joined the Australian Council of Superannuation Investors (ACSI) to influence and engage with companies on ESG issues, the Fund said in a statement.
It has also set up an impact investing framework in 2020, to help fund advisers identify and invest in assets that can generate a strong return, and a positive and measurable social and environmental impact.
Qantas partners Calvert have $US37.3 billion in assets under management and chief executive officer John Streur said Qantas’ focus on reducing carbon emissions was “a critical step in reducing the ESG risks in an investment portfolio”.
Goldman Sachs Asset Management, part of New York Stock Exchange-listed investment bank, has $US2 trillion in assets under supervision.
The group’s co-head Luke Sarsfield said investing “in line with energy transition” could enhance returns and mitigate climate risks for investors.
For more on ESG investment, you might like to consider our Fiduciary Investors Symposium – more information here.