Australian superannuation funds need to do more to push the companies in which they invest to slash their carbon emissions, the former governor of the Bank of England says.
But Mark Carney, who is also a former governor of the Bank of Canada and now an executive at one of the world’s biggest investment groups, Brookfield Asset Management, says funds and companies can only make progress with a clear government commitment to net zero and a clear pathway to get there.
The Albanese government last month strengthened Australia’s international commitment under the Paris agreement, which aims to limit global heating at 1.5C, pledging to cut emissions by 43% by 2030 – a target criticised by the Greens as inadequate.
Carney says government targets are a “prerequisite to get the focus” of companies and provide a “framework or an anchor to investor expectations, expectations of businesses investing”.
He says the community also needs to understand that “ultimately coal is going to be phased out”.
“The sooner that’s recognised by governments, by companies, by generators, by investors, the earlier the plans can be made to retrain, redeploy, remunerate workers, helping communities that are most affected move forward with the jobs and opportunities of the future,” he said.
He added that divesting from carbon polluting assets was not enough and investors had to ensure they were managed consistent with moving to net zero.
Carney was speaking on a panel at the annual conference of the Australian Council of Superannuation Investors, which represents profit-to-member funds, alongside former UN climate tsar Fiona Reynolds, and former Australian Prudential Regulation Authority member Geoff Summerhayes.
Reynolds, who previously ran UN-supported investor group the Principles for Responsible Investment and is now chief executive of financial publisher Conexus, said the Paris agreement contained a built-in ratchet mechanism, meaning that the 43% reduction committed to by the Albanese government would increase over time.
But she warned time was running short.
“Net zero by 2050 is still alive, but it has a very, very, very weak pulse,” she said. “Policy is going to have to accelerate really quickly in Australia.”
Summerhayes, who is now at climate consultancy Pollination, agreed.
“We are rapidly running out of time,” he said.
He said investors will be expected to be held to account for their scope 3 emissions, which take in those of a company’s customers, and to pour money into transforming the economy.
“We’ve taken 100 years to build a fossil fuel economy. We need to dismantle that and replace it in 10 years,” he said.
He said natural perils such as floods and fires were no longer one-off events and would become even more common as the globe heats “so I would make a case for adaptation”.
And he urged investors to “be brave”.
“What looks like a leadership position today looks pedestrian in eight years time,” he said.
