UniSuper’s investment strategy in decarbonisation remains firmly rooted in economic viability rather than political shifts, according to its chief investment officer.
In response to President Donald Trump’s “drill, baby drill” approach and the US withdrawal from the Paris Agreement, John Pearce made it clear that geopolitical events do not dictate the superannuation fund’s approach to sustainability.
“Trump pulled out of Paris before, and corporate America went headlong and kept on the decarbonisation path,” Pearce said.
“So, is corporate America going to do anything differently today because Trump’s going out? I don’t know, the jury is out.”
Pearce said that while UniSuper is committed to the decarbonisation thematic, determining where to invest remains a complex challenge.
“Decarbonisation is such a compelling thematic, that we are going to stick with it. The question is, where do you place your chips? That’s to me a much tougher question, so what we’re grappling with is exactly that,” Pearce said.
He also pointed to the current economic realities of renewable energy.
“The economics of a lot of aspects of renewable energy just don’t stack up for us at the moment,” Pearce said. “So, it’s got nothing to do with Trump pulling out of Paris, but we’re not going anywhere near hydrogen or anywhere near nuclear or offshore wind, because the economics just don’t stack up.”
Pearce said that geopolitics plays no role in the decision-making process.
“The geopolitics has nothing at all to do with that,” he said.
He also acknowledged the changing dialogue surrounding the energy transition, saying that energy security and affordability have become key issues alongside clean energy.
“We have to all accept too that even before Trump came in, there was change in the dialogue around the energy transition,” Pearce said. “Two or three years ago, it was all about clean energy, today it’s clean energy, we all want that, but it’s energy security, and energy affordability as well.”
Earlier this year, Dugald Higgins, Zenith Investment Partners’ head of responsible investment and sustainability, said that regardless of political shifts, businesses will continue to determine what environmental, social, and governance factors are material to their operations.
“Businesses decide what is material to their business. These companies have already invested in sustainability reporting and they are unlikely to stop,” Higgins said. “While today’s challenges may temporarily slow momentum, they will also shape a more sophisticated and economically driven approach to ESG.”
At the same time, data from Morningstar revealed that over 250 sustainable products globally rebranded or dropped key ESG terms in 2024, driven by Trump’s return to office, as well as a lack of clarity surrounding climate disclosure rules, especially in the US.
In Australasia, specifically, there were 12 sustainable fund closures during the fourth quarter, including funds from Magellan and BNP Paribas, indicating tough conditions for fund houses in general, as margin pressures crept up, Morningstar said.
However, on the flip side, the ratings house also revealed that global sustainable fund assets reached a record high of US$3.2 trillion at the end of 2024, an 8 per cent increase from the previous year.
