ART targets net-zero emission investment portfolio by 2050

One of Australia’s largest superannuation funds has set an interim goal of 43 per cent emissions reduction in the next seven years as it sets on the path to net zero by 2050.

Launching its Net Zero 2050 Roadmap, Australian Retirement Trust (ART) said it is taking a long-term view that aims to be “pragmatic, measured and actionable” to help manage climate risk while growing members’ retirement savings.

“Our Roadmap is led by guiding principles which recognise, most importantly, Australian Retirement Trust’s legal duty to our members,” said Nicole Bradford, ART’s head of sustainable investments.

“A key principle of our roadmap is that we cannot achieve a net zero greenhouse gas emissions investment portfolio by 2050 alone. We take seriously our role as an investor and have outlined activities which aim to support our emissions reduction targets by engaging with key stakeholders and encouraging investee companies to achieve real-world emission reductions towards a low carbon economy.”

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She said achieving a net-zero greenhouse gas emissions investment portfolio by 2050 will require a combination of emissions reductions and capital for investments that support decarbonisation.

Bradford added: “Australian Retirement Trust has set a number of targets across a range of activities that will help guide us to our Net Zero 2050 goal.”

These include a target of engaging with 100 per cent of ‘priority companies’ within its listed equities portfolio by 2030, where ‘priority companies’ are those investee companies that together contribute 70 per cent of financed emissions. 

As at 30 June 2022, ART engaged with 74 per cent of its priority companies in the listed equities portfolio either directly, through collaborative initiatives or through service providers.

It has also set a target of portfolio alignment with 50 per cent of its ‘priority companies’ to be ‘net zero’ or ‘aligned’ to a net-zero pathway within listed equities by 2030.

Ian Patrick, chief investment officer at the $260 billion fund, said the roadmap ensures guardrails are in place for ART to deliver on its net-zero commitments through its investments.

He added that the risks posed by climate change are some of the most significant of this time. 

“ART takes our responsibilities as a leading global investor and to our members seriously, and we’re proud to launch our Roadmap. Our roadmap acknowledges our part in the transition towards a net-zero economy, and we believe the industry’s ongoing collaborative approach to help address this challenge is preferable to trying to address this individually,” Patrick said.

“Harnessing capital as a collective, with a unified voice, may add to the pace and help achieve the sizeable shift required to solve some of the challenges we as investors – and our society more broadly – are facing.”

In August, the fund announced plans to double its sustainable investment team, recruiting across impact investing, ESG data and analytics, stewardship, ESG research, and integration. It has already hired Tim Unger from WTW as a senior portfolio manager in the sustainable investment team.

“As a systemic risk, if climate change is left unabated, it will impact the global economy,” Bradford observed.

“This means that to act in member’s best financial interests and help protect their future financial wellbeing, funds should be considering climate change alongside other traditional financial matters throughout all aspects of the investment process.”