Australia’s climate uncertainty a turn-off for investors: IGCC


Three global investor groups worth more than $US46 trillion ($62 trillion) have labelled Australia one of the least attractive destinations for green investment, alongside Saudi Arabia and Russia.

The Investor Group on Climate Change (IGCC), which counts AustralianSuper, AMP and Perpetual as members, has partnered with Asian Investor Group on Climate Change and Ceres to release a report analysing the impact of climate policies across G20 countries on attracting institutional investment.

Australian companies are losing out on billions of dollars in institutional investment per day due to the federal government’s lack of policy clarity on climate change. Credit:Nicole Cleary

While the United Kingdom and European Union are among the most attractive, Australia’s failure to set a net zero emissions target by 2050 and lack of credible policies to decarbonise the economy have placed it among the least attractive destinations for green investment. Less than 2 per cent of Australia’s COVID-19 stimulus was spent on green initiatives, compared to Canada, which spent 74.5 per cent, according to the report.

IGCC policy director Erwin Jackson said Australia’s 2030 target to reduce carbon emissions by 26 per cent was lagging the global average of 45 per cent and existing policy settings will lead to warming of between 2 and 3 degrees.

“There’s a really big gap emerging between Australia’s current 2030 target and what our other major allies and trading partners are doing,” Mr Jackson said. “That gap is a big concern for investors because the bigger the gap grows the more it shows Australia is exposed to the transition in the global economy that is underway.”

Mr Jackson said institutional investors want to park large sums of cash in long-term investments, and currently Australian investors are sending money offshore due to the lack of local investment options in clean energy or industries of the future.

“Investors want to invest billions, not millions. But you need a good national policy in place to attract the billions,” he said. “Billions of dollars are being invested in low emissions technology every day. This is a huge opportunity for Australia if we get the settings right.”

There remains a major disconnect between messaging from the federal government and conversations occurring in corporate boardrooms, Mr Jackson added, but the private sector now needed the government to articulate a clear decarbonisation plan to maximise profits from the clean energy transition.

“You have a significant portion of the ASX committed to net zero emissions, the investment community has committed to net zero emissions, a significant portion of the global economy has committed to net zero emissions,” he said. “It’s not about 2050, this is the mainstream, it’s about the pathway by which you take to get here.”

Meanwhile, a separate report by the Australian Conservation Foundation (ACF) has found that Australia could increase its 2030 decarbonisation target to between 50 and 60 per cent reductions on 2005 levels, if the decarbonisation of the electricity, buildings and transport sectors was prioritised.

The reports come as the National Party resists the federal government’s efforts to commit to net zero by 2050 ahead of the COP26 Climate Summit in Glasgow, with Deputy Prime Minister Barnaby Joyce raising questions around the impact of stronger targets on local jobs.

However, the ACF report claimed “a renewables-based electricity sector would create 46,000 additional jobs from 2021 to 2030 and combined with manufacturing of wind turbines and solar panels, this could increase to 76,000 jobs”.

ACF climate manager Gavan McFadzean said the 2030 target was just as important as a 2050 target, without which regional Australians would be most affected by frequent and severe droughts and firestorms, more severe floods and cyclones. “Regional Australia has the most to gain when it comes to strong climate policy and the most to lose from inaction,” he said.

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