Carbon Price to Have Limited, Varied Impact on Most Super Funds
The Gillard government’s proposed carbon price from July next year poses limited impact on super funds overall, a new report released today shows.
The research, commissioned by the Australian Institute of Superannuation Trustees (AIST) and conducted by global environmental research group Trucost, into the carbon footprints of the Australian equity portfolios of 14 of the largest superannuation funds found that at a carbon price of A$23 a tonne, carbon costs could amount to up to 0.8 per cent of revenue from companies held.
The carbon footprint of the 14 superannuation funds is 8 per cent smaller than the carbon footprint of the ASX 200 Index, indicating a slight bias towards less carbon-intensive investments. However, some portfolios invest in carbon‐intensive companies in the ASX 200 that will need to cut their emissions to manage financial risk from carbon costs.
AIST CEO Fiona Reynolds said the research would prove valuable for super funds in their measurement and management of carbon risks and opportunities.
“Super funds, as owners of Australia’s major corporations, need to know how the value of their investments may change under a carbon price scheme,” said Ms Reynolds.
“While the research suggests that a carbon price of A$23 a tonne will have only a relatively small impact on super fund revenue, it also points to those funds with a smaller carbon footprint being in the best position as Australia shifts to a low-carbon economy.”
Richard Mattison, Chief Executive of Trucost, said: "Our research shows that carbon costs could hit earnings most for ASX 200 companies, held in many of the funds, that are more carbon‐intensive than their peers in six sectors.
He advised that superannuation investment managers can manage carbon risk by integrating carbon metrics into investment processes and identifying opportunities from companies that are better positioned for a low‐carbon economy.