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Stephen Dunne explains the power of funds managers and climate risk

Stephen Dunne explains the power of funds managers and climate risk

The garden of climate mitigation opportunity is growing some very powerful pension funds managers. This is one of their people

While we still have a surprisingly long way to get all funds on board, Paris Accord aligned Superannuation funds or Pension funds are possibly the most reliable barometer and influencer of climate mitigation - or more accurately, minimising funds invested in climate unfriendly projects. 

Stephen Dunne is one of Australia's most experienced Funds Management Executives and is now the Chair of Investor Group on Climate Change (IGCC) and also the Chair of Cbus Superannuation Investment Committee. He joined Jennifer Nielsen to explain how investment funds and coalitions like the IGCC work.  The IGCC, for instance, are a coalition of Australian based Superannuation Funds worth around $1+ trillion. IGCC are in turn a member of the global group, The Investor Agenda. This collaborative group together has AUD$50 trillion assets under management. That is more than twice the USA's GDP.

You can watch the plain speaking interview with Stephen on The Eco Channel, where he explains how the funds management works and the growing withdrawal of support for businesses not committed to the Paris Agreement.

What is our Superannuation (Pension) Fund's job?

Our superannuation funds manager's single job is to invest our superannuation somewhere safe so that when we retire in 10, 20, 30, 40 years or so, we have made a decent return on our investment. As such, funds have two critical leverage points when it comes to climate change - money and time.

Politicians and corporations of all persuasions - fossil fuels, diamond miners, chemical manufacturers, palm oil vendors; employ all kinds of marketing and PR to sell their products and storyline, but in the end, bigger funds management money is louder than stories of hope and glory and we're out of time when it comes to bad climate impact decisions.

The need for responsible long term investment returns (and potentially the fiducial responsibility to provide returns), has a way of focusing you on risk and reality.

Climate change is a systemic risk and needs as many good actors on board as possible to make a difference

To join the IGCC, member funds must agree to align to the Paris Agreement. IGCC then advocate on the group's behalf to corporations and governments. Most importantly, since climate change is a systemic risk, and we are lagging targets,  everyone needs to be party to the solution. In this case, the fastest way to lasting and effective change is for all funds to be on the same page. Even with billions of dollars, funds can't always influence corporations alone.

By encouraging all super funds to have Paris aligned targets for their portfolios, the collective group simply represents enough money and citizen power to effectively give the Rio Tintos and BHPs of the world the option of adhering to the Paris targets if they want the support of the funds. 

Climate League 2030

An excellent example of what an empowered group like IGCC, looking to collaborate, can do, is the launch this week of Climate League 2030 week. It's a private sector focused initiative asking participants to support efforts to drive a further reduction in annual greenhouse gas emissions of at least 230 million tonnes on top of what is already projected for the end of the decade, and pledge at least one new action each year under three themes:

  1. Integration of Paris-aligned emissions reduction goals into investment policies or business strategies.
  2. Collaboration between investors, clients and companies to deliver emission reductions.
  3. Investment in new clean energy, clean technology and other projects and measures that reduce Australian emissions.

    Major institutional investors, Aware Super, Cbus, IFM Investors and the Queensland Investment Corporation have joined Climate League 2030 as foundational supporters. 

Institutional investors also participating at launch include Aberdeen Standard Investments, AustralianSuper, Australian Ethical, HESTA, Impact Investment Group, Lendlease Funds Management, Local Government Super, New Forests, Pendal Group, Pollination, UniSuper and the Victorian Funds Management Corporation.Over coming months Climate League 2030 will also be progressively opened to insurers, banks and companies to participate

What can an individual do?

Many funds have yet to commit to support the Paris Accord targets. Ask your super fund if it has committed to reducing their carbon footprint. And if they have they committed to the Paris commitment.

Most importantly, watch the interview with Stephen Dunne and learn as much as you can about how influence works and the differences you can make. 

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