Super giant’s net-zero promise raises pressure on companies

The fund committed to the interim target as part of a broader net-zero strategy announced last week.

Super customers are increasing pressure on funds to cut their emissions now and questioning how some of their investments and behaviour in the short-term aligns with their long-term net-zero goals.

ART head of sustainable investments Nicole Bradford said the interim target was vital to ensuring the fund could hit net-zero by 2050 and that its emissions reduced at the rate needed to limit climate change.

“Fundamentally, if we have this long-term objective we need to understand how the portfolio will transition in that time. You can’t just get to 2049 and decide to [decarbonise] the portfolio,” she said.

Investment strategy firm Scientific Beta last week warned that funds were failing to cut their emissions at 7 per cent annually as required to reach net-zero by 2050, risking greenwashing claims. European Union and UK funds advertising the 2050 target are required to meet this annual goal.

The fund will also link key staff remuneration to climate change performance under the new policy and require that board members have annual training on the issue.

It also pledged to vote on all climate-related shareholder resolutions at “priority companies” – meaning those that together contribute 70 per cent of financed emissions in its listed equities portfolio – next year, though it did not specify in detail how it would assess whether companies’ activities were in line with its targets before voting.

It also will adopt a time-bound escalation framework to pressure companies it invests in to reduce their admissions. It comes as other funds face legal threats from members claiming their “active investment” approach of using their power as shareholders to push for lower emissions is failing to create change and the corporate watchdog warning this could amount to greenwashing.

Interim target

The Australian Conservation Foundation’s corporate campaign strategist, Jonathan Moylan, welcomed ART’s target, but said it was “disappointing” it had not aimed higher than 43 per cent.

He said the fund had the resources – it has doubled the size of its sustainability team this year and appointed former Reserve Bank deputy governor Guy Debelle to its senior ranks to focus on renewables – to make a more ambitious commitment.

“This is genuine progress, but the surging nature of the climate crisis demands bolder commitments from such a powerful player,” he said.

ART’s interim target only applies to financed emissions, meaning equities, infrastructure and real estate, but these account for the bulk of its investments.

While many funds have privately or publicly acknowledged the need for interim targets, few have adopted them. AustralianSuper even lobbied the government’s Climate Change Authority to introduce them despite not having any itself.