At First State Super, we see it as our responsibility to factor risks associated with climate change into our Investment strategy.
This means actively encouraging the transition to a lower carbon future. Not just because of the risks it poses, but because it makes good financial sense to support businesses with a long term, sustainable outlook.
Our turning point was the , where the nations of the world reached an accord to lower emissions, and transition to a carbon neutral economy. This led us to completing a year of rigorous research and developing the Climate Change Adaptation Plan. We’ve since been recognised as the highest ranking asset owner in the Asia Pacific region and which ranks asset owners on their approach to managing climate change risks.
How climate change affects your future
As part of our duty of care to our members, we must understand the risks posed by climate change and its financial impact to their investments, both direct and indirect. Direct risks can be extreme weather events, like flooding or fire, disruption of food supply, or increased costs of food and power. Indirect risks can include asset depreciation as new sectors emerge – like sustainable energy – or old asset classes being stranded. Other examples could be reputational damage or increased costs due to regulatory restrictions. As you can see, by addressing climate change, we not only hope to protect our investments, but deliver long-term returns to our members.
What we’re doing today
Understanding these risks to our financial investments is the first step – specially the physical impacts of climate change. We’re undertaking a high level physical risk impact assessment on our total portfolio with a view to making our investments resilient to the effects of climate change. We also actively engage with our companies, working with them to improve their disclosure, understand any potential stranded assets, and transition to a low carbon economy. Finally, we actively seek investments in renewables – the key to reducing emissions and transitioning to a sustainable future. As a result, we have invested in renewable energy projects throughout the world, including investments in North America, South America, Europe, and Asia Pacific.
By managing the risks climate change poses to our fund, both direct and indirect, we believe we are carrying out our duty to preserve your financial future.
Asset Owners Disclosure Project ‘AODP Global Climate Index 2017/Asset owners’: https://aodproject.net/reports/ ↩