INSIGHT by UNEP FI
Australian building and construction industry pension fund Cbus has announced its membership of the UN-convened Net-Zero Asset Owner Alliance.
The fund is the first Australian asset owner to join the Alliance, bringing membership to 29 managing nearly US$5 trillion in assets.
| “Cbus recognizes that to decarbonize the global economy in line with the Paris Agreement requires collective action,” CIO Kristian Fok said. “Cbus is determined to play our part in these global advocacy efforts.”
Announcing its new Climate Change Roadmap, Cbus said it would target an “ambitious” 45% reduction in its absolute portfolio emissions by 2030, in line with the prevailing science. The Intergovernmental Panel on Climate Change (IPCC) released a Special Report in 2018 suggesting deep emissions reduction is required globally by 2030. An estimated 45% carbon reduction from 2010 levels is needed to have any chance of limiting warming to 1.5 degrees.
Mr Fok said the second iteration of the biannual roadmap charts a clear course for Cbus’s ongoing work in reducing emissions and safeguarding members savings from climate related risks.
| “Cbus Climate Change Roadmap represents a strong and sure determination to see our members retire securely in a safe climate,” he said. “The average Cbus member is 39 years old. It’s our responsibility to safeguard their investments as the financial impacts and physical effects of climate change intensify.”
Mr Fok said a focus on a green recovery is important for workers as the global economy seeks to recover from the Covid-19 pandemic. “Recent events are a demonstration of the importance of resilient communities anchored around decent and secure jobs,” he said.
| “The climate solutions we invest in should strengthen community resilience. Every investor has to be mindful to the risks of leaving communities behind.”
Under the Roadmap Cbus will develop a stranded assets framework, building on work that has already seen several high-risk climate holdings reduced or being removed from their portfolio.
| “The economy of 2030, let alone the economy of 2050, is going to look very different from what we have experienced over the last few decades. That poses risks for long-term investors like Cbus. There are assets that simply won’t see out their traditional economic life,” Mr Fok said.
Under Cbus’ new Roadmap, pathways to achieve this portfolio targets will be developed for each assets class, including equities.
| “Portfolio-wide targets gives us more flexibility as to how we allocate our members money. This next two-year road map will see climate pathways developed across sectors and asset classes, acknowledging the economy will decarbonise at different rates. This approach also provides consistency with what we ask of companies and assets in which we invest,” Mr Fok said.
The Net-Zero Asset Owner Alliance is an international group of institutional investors committed to transition their investment portfolios to net-zero greenhouse gas (GHG) emissions by 2050, which was launched at the Secretary-General’s 2019 Climate Action Summit. The initiative is centred upon a united investor action to align portfolios with a 1.5°C scenario, addressing the finance goal (Article 2.1c) of the Paris Agreement.
Construction and Building Unions Superannuation (Cbus) is one of Australia’s largest public offer industry superannuation funds. Cbus is run for the benefit of its members and does not pay dividends to shareholders