Sustainability and resilience is also about your pension

You probably didn’t expect to see a post on pension funds in this blog, but if you think about it we all want to be able to get through our “third age” without having to think too much about where the money is coming from, and without being forced into unsustainable options just because of a lack of funds.

On Tuesday in attended the  one-day ‘Economic Growth, Climate Change and the G20’, conference hosted by the Asia Pacific Centre for Sustainable Enterprise at the Brisbane Convention and Exhibition Centre.  One of the best conferences I’ve ever been to for a lot of reasons.  Everyone was “on message”, the facilities were fantastic, the room held 250 people without being crowded or anyone not being able to see or hear the speakers.  But what really made it great were the members of the four panels and their moderators.  I’ve never been at a panel-type conference where the panel members were so knowledgeable and lucid in relevant fields.

One of the panelists in the session that addressed the question of how capital markets address un-burnable carbon (think “stranded assets”) was Dr John Hewson.

Dr. Hewson’s business career before entering politics in 1987, was as a company director and business consultant and included roles as Foundation Executive Director, Macquarie Bank Limited and as a Trustee of the IBM Superannuation Fund.  Dr. Hewson’s political career included 7 years as a ministerial advisor (to two successive Federal Treasurers and the Prime Minister) and a further 8 years as the Federal Member for Wentworth in the Federal Parliament. He was Shadow Finance Minister, Shadow Treasurer and Shadow Minister for Industry and Commerce, then Leader of the Liberal Party and Federal Coalition in Opposition for 4 years.  He has worked as an economist for the Australian Treasury, the Reserve Bank, the IMF.

And, most relevant to the topic of his panel at Tuesday’s conference, Dr Hewson is also the chair of the Asset Owners Disclosure Project (AODP), an independent global not-for-profit organisation whose objective is to protect members’ retirement savings from the risks posed by climate change.

A key activity of the AODP is an annual survey and assessment of the world’s 1000 largest pension funds, pertaining to their management of climate change risks and opportunities.  This results in published rankings to allow members, stakeholders and industry to see which funds are better than others at managing climate risk.  These funds currently manage in excess of US$52 trillion and of this high-carbon assets often constitute 50-60% portfolios, with low-carbon assets typically representing less than 2% (DB Climate Change Advisors, January 2010).

You can look up the AODP Climate Index of pension funds to see whether your super/pension fund is there and how it rates.  You can use the drop-down box at the top of the page to restrict the range of funds shown (e.g. Australia, or Asia-Pacific).  It’s interesting to see that six Australian funds are in the top-20 globally.

As a footnote, Australia’s Local Government Super (for local government employees and Councillors) ranked top of the 1,000 funds assessed last year, and second this year, for their climate-change-ready investment portfolio – while our Lockyer Valley Regional Council is still developing a climate change policy.

 

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