Is scale needed for net zero outcomes?

Having scale is the best way to reach net zero outcomes, as larger funds have more influence over investment decisions, according to a panel.

Speaking at the Frontier conference, Sue Brake, Future Fund chief investment officer (CIO), said decarbonisation was a huge theme and not being part of it meant being an ineffective steward of assets.

“The way in which you can get thoughtful in the way you help the energy transition and how make sure capital is in the right place to make the change is something smaller funds would not have the same influence,” Brake said.

“I do think there’s an advantage, there’s some interesting ways in which we can help the transition and I’m not saying smaller funds can’t participate in that, but I can see some really interesting strategies we’re running and themes we’re looking at where you need a bit of capital and resources to be able to run.”

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Kristian Fok, Cbus CIO, said there was more collaborative efforts on this particularly around private markets.

“When you can control capital decisions and reframe how you might choose between maybe on opportunity that is mindful around low discount rates, new technology or increasing sustainability… having scale capability and influence means you can do a lot more there,” Fok said.

“We’ve certainly seen that in the property space but now we’re seeing infrastructure assets being considered in the same way.”

Mark Delaney, AustralianSuper CIO and deputy CEO, said: “It really is a combination of good investment sense and good social sense so if we’re in a position to do something we should do it”.