The $100 billion superannuation fund for the country’s university sector has threatened to divest holdings in biotech giant CSL if it does not set a net zero emissions target, as part of its policy to decarbonise its entire investment portfolio.
In a climate report released on Thursday, Unisuper disclosed it had halved its exposure to the fossil fuel sector over the previous financial year and fully divested from companies that make more than 10 per cent of revenue from thermal coal.
But the fund also singled out three ASX-listed companies — COVID-19 vaccine producer CSL, gamer Aristocrat and logistics company Qube — that were at risk of being abandoned if decarbonisation targets were not set.
Unisuper says CSL’s approach to cliamte change has been ‘disappointing’. Credit:Eddie Jim
“While most of these companies aren’t high emitters and have clear pathways to decarbonisation, it’s disappointing they have been slow in their adoption of emission reduction targets,” the report said.
The fund, which has more than 450,000 members, pledged to continue engagement but threatened to protest remuneration reports or fully divest, “especially where a lack of action represents a material risk to us and there is no viable decarbonisation pathway”.
In his annual remarks filed with the ASX on Wednesday, CSL chair Brian McNamee said the company was working on setting “environment, social and sustainable” targets within the next two years.
Qube spokesman Paul White said the company had engaged an independent expert last financial year to identify appropriate methods to reduce carbon emissions and “adopt realistic targets”.
An Aristocrat spokeswoman said the company maintains “active dialogue with Unisuper” and “value their expertise and input”, adding the company was “on a journey” with respect to greenhouse gas emissions and would consider “potential commitments as soon as possible”.
Unisuper launched a revamped climate policy last September which commits to having net-zero carbon emissions across its investment portfolio by 2050. The plan included a series of interim targets, including ensuring all companies the fund is invested in have Paris-aligned targets by the end of this year.
“We’ll then shift our focus to supporting the adoption and delivery of robust 2030 decarbonisation targets for business operations and value chains,” Unisuper’s latest report said.
Market Forces director Will van de Pol said there was a “very small portion” of ASX-listed companies that had meaningful decarbonisation plans and called on Unisuper to escalate engagement tactics with all companies. “The vast majority of ASX-listed companies can and must be part of the transition,” Mr van de Pol said. “So engagement is an appropriate strategy for the majority, but it needs to come with clearer expectations, milestones that need to be met and where they’re not being met the ultimate sanction is divestment.”
Unisuper reported its total exposure to fossil fuels had reduced from about 5 per cent to 2.5 per cent of all investments over the previous financial year, which included selling down stakes in Australian oil and gas giants Oil Search, Santos and Woodside. The fund’s remaining investments in the fossil fuel sector are largely in gas pipelines but stakes in North American pipelines Enbridge and TC Energy had also been reduced, according to the report.
”These were largely held in the [defined benefit fund] because they had reliable cash flows, dividends and predictable growth profiles,” the report claims. “However, the threat from decarbonisation is increasing and they do not have an obvious pathway to Paris alignment.“
Mr van de Pol called on Unisuper to formalise investment exclusions for the oil and gas sector. “There’s no commitment to suggest this is necessarily a one-way street. So we’d really like confirmation from the fund that it won’t be reinvesting members’ money in these companies and will continue to reduce all fossil fuel investments,” he said.
One Unisuper insider, who could not be named because they were discussing sensitive information, said it was “unlikely” the fund would actively make new investments in oil and gas. “If you look longer term, we’re not optimistic about the future.”
Former Climate Commissioner Professor Lesley Hughes, who has authored previous reports for the Intergovernmental Panel on Climate Change (IPCC), said Unisuper’s trajectory was pleasing but faster action was needed. “They’re certainly heading in the right direction, which is great news, but they still have a way to go.”
Professor Hughes, who is a Unisuper member, said the latest IPCC report warned global temperatures could be stabilised “if we make deep and rapid emissions reductions now” without which, the consequences will be dire.
“Right now, at 1.2 degrees warming, we’re already seeing longer, hotter, more severe heatwaves and drought in Australia, stronger and more severe cyclones, bleaching of the Great Barrier Reef three times in five years. It’s almost unimaginable what life on this planet could be at more than 2 degrees warming.“
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