Pension funds in Australia and the UK are embracing recent developments that will facilitate the deployment of superannuation capital toward the energy transition in both countries.
This week, UK chancellor Rachel Reeves announced major reform to Britain’s debt rules that will permit Treasury to borrow more for long-term capital investment.
The announcement comes shortly after IFM Investors, in conjunction with some of the largest pension funds in the UK and Australia, released a landmark blueprint outlining “carefully targeted policy action” to unlock pension capital in order to contribute to the UK’s clean power by 2030 mission.
Aware Super, CareSuper, Cbus Super, HESTA, Hostplus, and Rest have signed on to the agenda, with the aim of helping the UK reach its goal.
This week’s reform introduction in the UK was the key item in the blueprint, IFM said in a statement on Friday.
“According to the blueprint, reforming the fiscal rules to treat unlisted productive assets as an asset will help incentivise long-term public investment in the net zero transition, creating the conditions for National Wealth Fund (NWF) and Great British Energy (GBE) to crowd in pension capital at scale,” the super fund-backed asset manager said.
Namely, the UK government has made clean power by 2030 one of its defining priorities and expects pension funds, both local and globally, to play a major role in financing the wider transition.
Also this week and on the sidelines of the Commonwealth Heads of Government Meeting in Samoa, Anthony Albanese and Prime Minister of the UK, Keir Starmer, reaffirmed their commitment to the economic opportunity presented by the transition to net zero .
“The Albanese and Starmer Governments believe private capital and the power of government can be leveraged to shape a clean energy future in the interests of working people. [T]o this end, the Prime Ministers agreed to enhance bilateral co-operation on climate change and energy by negotiating a dynamic new partnership,” a joint statement from both governments said on Friday.
IFM global head of external relations, David Whiteley, said that IFM and industry super funds are working with governments in Australia and elsewhere to find the best investment opportunities for fund members.
“Australian and British pension funds have demonstrated their preparedness to collaboratively work closely with governments to identify investment opportunities that contributes to the long-term retirement savings of tens of millions of working people and accelerates the energy transition,” Whiteley said.
Last year, IFM and industry super funds released an energy blueprint for Australia that focused on policy settings to accelerate the energy transition in Australia, including faster approvals for transmission projects, removing regulatory barriers to battery projects and the development of a local Sustainable Aviation Fuel.
The funds, including AustralianSuper, Australian Retirement Trust (ART), CareSuper, Cbus, HESTA, Hostplus, Rest Super, and UniSuper laid out their recommendations in “Super-powering the energy transition: A policy blueprint to facilitate superannuation investment”.
Achieving net zero and transforming Australia into a renewable energy superpower, it said at the time, will require investment on a “massive scale”.
