NGS Super on track to decarbonise portfolio by 2030

NGS Super has announced it is on track to meet its 2030 targets, with the measurement of carbon intensity in its MySuper portfolio now some 13 per cent ahead of the required trajectory to carbon neutrality.

The industry super fund has announced the measurement of carbon intensity in the NGS Diversified MySuper portfolio fell by nearly 20 per cent between 30 June 2021 and 30 June 2022.

It has now set an interim target of 35 per cent by 2025. 

Ben Squires, NGS chief investment officer, said the fund is tracking ahead of schedule of its “bold target”.

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It has committed to reviewing and reporting annually on progress against its targets, which will include re-evaluating the scenario analysis findings, remeasuring the carbon intensity of the portfolio and tracking progress, and reassessing its glide path analysis and pathway to 2030 targets. 

“Decarbonising an investment portfolio is not a linear process and we expect ups and downs along the way as many companies and industries may see an increase in carbon intensity as they develop more sustainable low-carbon operating models,” Squires said.

“Importantly, super funds need to be flexible to ensure members’ financial interests are protected.

“We also need to allow businesses that we believe are genuinely committed to action on decarbonisation the time and opportunity to achieve their goals – but this doesn’t mean targets can’t be accelerated either.”

Its decarbonisation process and results are expected to be audited by KPMG in October.

On measures to make the portfolio more carbon-efficient, NGS outlined engagement with companies regarding their emissions reduction path and divestment, including its $191 million divestment from carbon-intensive companies and industries, like Woodside and Santos, since the start of its decarbonisation process.

It expects to complete more work around carbon-positive investments to sequester carbon, such as natural capital and carbon capture utilisation and storage (CCUS). 

Squires observed: “We know that there’s still much to learn around striving for the most effective decarbonisation process, but we’re confident we can achieve our targets while always acting in our members’ best financial interests. Our divestments haven’t affected investment returns and have reduced our portfolio’s exposure to climate change transition risk.” 

The investment executive said the fund “must take decisive action” to contribute to change, including supporting companies building sustainable, lower-carbon businesses. 

It has identified promising opportunities in timberland or carbon funds that invest in sustainable forestry and farmland and private equities involved with carbon capture and storage technology development/initiatives. 

In June, $72 billion fund HESTA announced it has met its initial climate target of a 33 per cent reduction in normalised portfolio emissions by 2030 (against a 2020 baseline), eight years ahead of schedule.