We’re working with industry leaders to take credible action on climate change. Here’s what it means for our members.
For many organisations in Australia and around the world, climate change has been the catalyst to overhaul traditional business models in favour of a more environmentally responsible and sustainable approach.
Climate change presents a significant risk to economic growth over the long term, and this translates into investment risk. On the flip side, there are significant opportunities to invest in new ways as the world transitions to a low-carbon economy.
Leading the charge
Aware Super is focused on the risks and opportunities associated with environmental, social and governance (ESG) factors, including climate change. We have been focused on understanding the potential impacts of climate change on our investment portfolio and members’ returns since 2015.
Aware Super was one of the first super funds to develop a Climate Change Adaptation Plan. In 2019 we went a step further, and following analysis of advances in climate science, increasing evidence of the impact of climate change and strengthening of global targets and commitments to reduce emissions, we created our Climate Change Portfolio Transition Plan in 2019.
Under this plan, we aim to achieve net zero emissions by 2050 and an economy-wide 45% reduction in emissions by 2030. To achieve our goal, we set out shorter term low-carbon investment activities. For example, we aimed to achieve a 30% reduction in emissions from our listed equities portfolio by 2023, and as at 30 June 2021 we had already achieved an emissions reduction of 45%.
A shared goal
Mindful that such a monumental plan cannot be achieved alone, Aware Super has been actively engaging with world’s highest emitters to drive change. Through these direct and collaborative engagement efforts, there has been a voluntary commitment from some of these high emitters to create and put to shareholders a low-carbon transition strategy.
In the 2020-21 financial year alone, we invested approximately $1 billion in renewables and low-carbon technologies in the Infrastructure and Private Equity
sectors. We also have a green, sustainability-linked bond portfolio with around $450 million invested to-date and are continually looking for more opportunities.
We also made an investment alongside Lend Lease US in a portfolio of property investments in the US. In the delivery and operations of those assets, we’ve achieved an audited net zero carbon emissions.
Aware has also made an AUD$80 million commitment in the Private Equity asset class to the Adamantem Capital Fund II, which requires all investments to have an independent emissions baseline completed (scope 1 & 2 emissions). Each investment will then be required to develop and implement detailed emissions reduction pathways.
In FY21 the Aware Super Private Equity team invested in Perfect Power Solutions – a US-based company developing battery storage projects in New York City. Across 9 projects under consideration, once operational, the emissions benefit could be the equivalent of taking c.1,000 cars of the road per year, as they replace traditional gas fired electricity peaking plants.
In February 2021, Aware Super Infrastructure acquired a 10% interest in Terra-Gen, a US renewable energy platform, alongside First Sentier Investors. Terra-Gen is a US renewable power platform focused primarily in California. The platform operates more than 1,600 megawatts (MW) of operating assets across wind, geothermal, solar, and battery storage technologies and has more than 3,000 MW of projects under development. The platform also has operating and advanced stage development battery storage projects poised to capitalise on California’s significant and increasing need for flexible dispatch resources.
“We hear from our members that they are concerned about broader ESG risks, but in particular the risks we face from climate change,” Aware Super’s Chief Investment Officer Damian Graham said.
“We incorporate ESG risks into all of our investment decisions, because we believe that better management of ESG risks will deliver improved long-term returns. That’s why we have such a strong conviction that addressing the investment risks raised by climate transition is critically important.”