Australian pension fund association raises bar for companies on climate change

• Australia's main association representing pension fund investors said it was tightening its climate change policy and may recommend voting against directors of companies which are not moving fast enough to meet Paris goals.
• The Australian Council of Superannuation Investors' (ASCI) is also urging companies to adopt shareholder resolutions known as "Say on Climate."
• Those resolutions typically call for annual disclosure of emissions, a strategy to reduce emissions and a non-binding vote on corporate climate plans at annual general meetings.

Australia's main association representing pension fund investors said it was tightening its climate change policy and may recommend voting against directors of companies which are not moving fast enough to meet Paris goals.

The Australian Council of Superannuation Investors' (ASCI) is also urging companies to adopt shareholder resolutions known as 'Say on Climate' which typically call for annual disclosure of emissions, a strategy to reduce emissions and a non-binding vote on corporate climate plans at annual general meetings.

ASCI's 36 members collectively own on average 10% of every ASX200 company and its new climate change policy will go into effect from 2022.

Companies should align their corporate strategy to the Paris Agreement and the objective of net zero emissions by 2050, the ASCI said in a statement.

They should also set short, medium and long-term emissions reduction targets and stress test the resilience of their portfolios and strategy against climate change scenarios, it said.

The ACSI and other investors have so far secured commitments for "Say on Climate" resolutions from Woodside Petroleum, Santos, Rio Tinto, and Oil Search in 2022.

The ASCI will initially focus on ASX200 companies in climate-exposed sectors such as energy, utilities, transport and materials.

"Climate change risks are deeply embedded in the financial system and impact all sectors and asset classes. For long-term investors, this poses a serious challenge to long-term value creation across investment portfolios," said ASCI CEO Louise Davidson.

According to Australia's clean energy regulator, utility AGL Energy was the country's top producer of emissions in the last financial year. Other listed entities among the top 10 include Origin Energy, Chevron's Australian unit and Woodside Petroleum.

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