Super funds warned — factor in carbon risk

Superannuation fund trustee/directors need to take greater account of carbon risks in their investment decisions, according to Norwegian chair of the Principles for Responsible Investment (PRI), Martin Skancke.

Speaking during a panel discussion at the Association of Superannuation Funds of Australia annual conference, in Brisbane, Skancke said that climate change could not be ignored as an investment issue and that mispricing was occurring in circumstances where no one owned the atmosphere but it was being used by everyone to store CO₂.

He said this in turn created a very misleading picture of many of the companies in which super funds chose to invest in because it was sending a very wrong price signal to the companies themselves.

Skancke said that funds needed to factor in the risk to those carbon-related companies that their positions will be significantly affected when governments finally reach a viable policy position.

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"We have a carbon-based energy system that is unsustainable in its present form," he said.

Skancke said that, ultimately, the risks flowing from exposure to carbon fuels would impact more than just the direct investors and there was a need for investors to factor in what they would ultimately to.