Fund “heads in sand” on climate risk

An Australian superannuation fund with A$6.6 billion ($6.9 billion) under management has achieved number-one ranking in a global survey of how the world’s top 1000 retirement funds, insurance companies and sovereign wealth funds are responding to climate risk.

Sydney-based Local Government Super (LGS) has received the top ranking in the inaugural Climate Index of the Asset Owners Disclosure Project (AODP).

The index was built following information requests to the world’s top 1000 asset owners from 63 countries, with around $60 trillion in funds under management. The survey focused on five main categories: transparency, risk management, investment chain alignment, active ownership and low carbon investment.

“We’ve been working steadily to build a sustainable portfolio for over 10 years,” said Peter Lambert, chief executive of LGS.

“The holistic approach, in which LGS seeks to invest in line with environmental, social and government principles across all asset classes, not just a few that might be considered easier, is what sets us apart.”

Around $3.46 billion, or just over half, of the LGS portfolio is held in responsible investment strategies across Australian and international equities, property, absolute return, private equity and sovereign bonds.

Australian funds made up six of the top 10 funds. South Africa’s AAA-rated Government Employees Pension Fund, which has calculated its exposure to fossil fuel reserves through the balance sheets of investee companies, was ranked second.

Also in the top 10 were Dutch funds PFZW and APG Group, along with Canada’s British Columbia Investment Corporation.

Overall, the creators of the index sounded a warning, with AODP chair John Hewson saying that despite signs of progress, the index “paints a disturbing picture of greenwash and reckless mismanagement”.

Julian Poulter, executive director of AODP, said the index showed that many funds had their “heads in the sand” on climate change and there was a “crisis of transparency” with 91 funds having “absolutely no public information available” on their climate strategies.