Super fund says Australia’s climate policy void sending investment dollars overseas

Australia’s lack of any semblance of a serious national policy plan to help combat climate change threatens to cost the national economy trillions in redirected investment dollars, industry superannuation fund Hesta has warned.

Hesta, a $52 billion health and community service workers superannuation fund with more than 860,000 members, recently committed to its own Climate Change Transition Plan to reduce the absolute carbon emissions in its investment portfolio by 33% by 2030, and achieve ‘net zero’ by 2050.

The fund’s CEO, Debby Blakey, said that while institutional investors like Hesta were keen to play their part in the de-carbonisation of Australia’s economy, investments in overseas markets with firm and long-term climate policies were currently more attractive, and less risky.

“While we want to invest more here, for every $1 we have invested in Australian renewables, we have $3 committed to equivalent assets overseas,” Blakey said in Hesta’s submission to the Morrison government’s Technology Investment Roadmap discussion paper.

“These assets are in countries that provide stable, predictable policy settings, which have given us the confidence to make long-term investments.”

Hesta, like numerous other Australian businesses and organisations, has used its submission to the discussion paper to call on the federal government to set a 2050 ‘net zero’ emission reduction target, and thus provide a clear economic pathway to a low-carbon future.

Failure to do so, Blakey says, could only result in a disorderly, rushed transition.

“We are at a critical juncture – the time to choose and commit to a low-carbon economy is now,” she said.

“We don’t want to see a carbon-led recovery that locks in long-term emissions and increases the risk of assets becoming stranded.

“Climate change represents a financial risk and leading global investors are already putting in place strategies to drive down the carbon in their portfolios and invest more in opportunities arising from the need to transition the world economy.

“In Australia alone we have an incredible opportunity to attract not only global investment but to draw on the almost $3 trillion pool of superannuation savings to power a green-led recovery from COVID-19.

“But there is growing global consensus from investors and business leaders about the urgent need to set long-term emission reduction targets.”

In January, data released by Bloomberg New Energy Finance confirmed that investment in large scale renewable energy in Australia plunged in 2019 as the federal government turned a blind eye to the needs to continue the clean energy transition, and provided no policy certainty.

The 60 per cent fall in investment – just as the country needed to accelerate the clean energy transition – was also blamed on numerous other issues that have emerged in the past two years, such as connection delays and transmission losses and overcrowding on certain parts of the grid – all of which point to a lack of long term planning.