How your super’s focus on a zero carbon future benefits you

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February 09 2021
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The chief investor of Australia’s second largest superannuation fund has explained why Aussies should pay more attention to a fund’s ESG focus.

Aware Super, which is poised to hit $200 billion in assets under management in the next two to three years, has upped its focus on ESG, with its chief investment officer Damian Graham touting the fund’s general need to look at the long-term impacts of investing ethically.

Defending his funds position on ESG and commenting on Minister for Superannuation Jane Hume's recent comments that Australian funds are not there to make the world a better place but rather achieve the best outcomes for members, Mr Graham outlined the ability of ESG to boost winnings.

“We divested from the producers of thermal coal last year, and the reasons we did that was not ideological,” Mr Graham said during a Bloomberg press conference.

“The reason we did that was because we felt there were risks to the long-term earning streams that we should start to moderate the exposure to.

“That was done on an investment basis, not ideological, but it really does say we need to think about all the risks that drive long-term returns and, for some companies, the risk of stranded assets,” he said.

According to Mr Graham, the shift to a low-carbon world is not purely about risk reduction, it also has the power to create opportunities for investors.

“I think it’s critical. It’s not just risk reduction but it’s also how can we invest in assets that will really benefit from a low-carbon future,” Mr Graham said.

“That will be as much around renewable and other technologies as well as moderating the levels of carbon emissions.”

The CIO also opined that the Morrison government’s gas-led economic recovery from the COVID-19 pandemic is a missed opportunity to transition into a low-carbon world.

“It is our position that there is an opportunity to continue to invest in renewable technologies that benefit from the transition than gas,” he said.

However, Mr Graham stopped short of saying government policies are holding back Australia’s transition.

“I wouldn’t necessarily say the biggest issue at the moment is policy, but more the dynamics of the market,” he said.

“We saw in the last few years some negative prices coming through energy markets, which can make it quite difficult for renewables where you’re making a loss running a generation asset which is a challenge.”

“I do think the dynamics around improving the grid across Australia is focused on the combination of all energy sources are managed as well as possible to reduce that risk,” Mr Graham concluded.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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