State Super is targeting net-zero carbon dioxide across its investment portfolio by 2050, setting a milestone of a 45% reduction in greenhouse gas emissions by 2030 against a December 2020 baseline.
Formulated with input from NSW Treasury Corporation and Mercer, the targets were in response to the goals of the Paris Agreement.
State Super’s chair, Nicholas Johnson, said: “It has become abundantly clear… that in acting in the best financial interests of members, superannuation trustees must respond to the investment risks associated with climate change and seek to mitigate them”.
“It is equally important for them to realise investment opportunities that will come from the transition to a low-carbon economy, including from new technologies, initiatives and policies over short, medium and long-term investment horizons,” Johnson said.
State Super’s chief executive, John Livanas, said the fund had undertaken a significant program of work to ensure their new objectives aligned with the best interests of its members and their risk-adjusted returns.
“Importantly, many of our members have actively engaged with us about their expectations for climate change risk to be effectively managed,” Livanas said.
“We understand and appreciate their views. In addition, science experts and data from the Intergovernmental Panel on Climate Change also show it makes the best financial sense to act now.
“We will update our board and State Super members regularly on the decarbonisation of our investment portfolio.”
Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Coalition, which has pledged to reverse any changes if it wins next year’s election.
In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges.
Chant West analysis suggests super could be well placed to deliver a double-digit result by the end of the calendar year.
Specific valuation decisions made by the $88 billion fund at the beginning of the pandemic were “not adequate for the deteriorating market conditions”, according to the prudential regulator.