The Association of Superannuation Funds of Australia (ASFA) has released a discussion paper seeking feedback on direction for its views on climate change.
The discussion paper explored the reasons superannuation funds should consider climate change risk when making decisions and the importance of employing mitigation strategies to reduce the risks.
The mitigations strategies that had been explored include a commitment by super funds to:
- Reach net zero greenhouse gas emissions in their investment portfolio by 2050;
- Engage with businesses on climate change risk to support them on their journey to mitigate climate change risk; and
- Adopt the United Nations Principles of Responsible Investment approach.
Some of the key questions the association was interested in receiving feedback on:
- Were Australian regulators clear enough in their expectations of organisations when dealing with climate change risk?
- Do you support an objective of the super industry being accountable for net zero emissions by 2050 (in terms of their investments)?
- Would that be ambitious enough – should the aim be for 2040?
- How does the best financial interests duty interact with the net-zero emissions commitment?
- Would you support the disclosure of progress towards net-zero emissions by 2050 through a superannuation fund’s portfolio holdings disclosure obligations? If so, is a materiality threshold required?
- What role will products such as green bonds play in meeting the net-zero emissions commitment?
- What other products need to be created to achieve the net-zero emissions commitment?
- At what point should super funds begin to engage businesses they were invested in for best results?
Dr Martin Fahy, ASFA chief executive, said: "In the absence of a commitment to net-zero greenhouse emissions by 2050, the superannuation industry stands to lose billions of dollars in investment returns on behalf of their members, which ultimately translates to less retirement savings”.
Feedback for consultation would close on 15 October, 2021.