Australian news, and some related international items

Australia’s finance sector can address climate change

Renewable power is in our hands, Sydney Morning Herald, Paddy Manning, February 12, 2011 “…….Funds must factor in climate change  Only the finance sector has enough power to take on Australia’s resources industry, but will it?

We have one of the world’s largest retirement savings pools and sitting atop that pile of money are the super fund trustees who invest money on our behalf.
hey are supposed to have a long-term investment horizon. As Regnan’s managing director, Erik Mather, says, it’s about matching assets and liabilities.

”The average working Australian is just under 38. It’s going to be at least 22 years before they can access their super. The average Australian is going to live until they’re 81. So you’re talking about a 43-year timeline to save for your retirement. Very few people are willing to say there is no chance of climate change risk occurring over [that] horizon. We’ve got to be taking carbon into account.”

This week the Climate Institute and Australian Institute of Super Trustees launched its third climate change survey, sent to every super fund larger than $300 million. Its Asset Owners Disclosure Project is supported by everyone from GetUp! to Greenpeace.

Asset owners, it says, must recognise that climate change is an investment risk with a unique profile: ”For the first time there is a long-term risk that also has high certainty and high impact.”

With carbon prices forecast to hit $US50 a tonne by the end of the decade, it’s an increasingly urgent question for Australian super funds who may find up to 40 per cent of their investment portfolio is concentrated in high-risk sectors. ”A large proportion of this exposure [is] in capital-intensive assets that have lifespans of up to 40 years,” states the institute’s survey methodology.

There are huge implications for asset allocation and traditional portfolio theory. The methodology cites Norway’s giant Government Pension Fund – Global, which has set itself a 5-6 per cent allocation to low carbon assets as a hedging strategy. In Australia, an equivalent policy would represent billions of dollars flowing into the clean tech sector. We’re going to need it.

Renewable power is in our hands

February 14, 2011 - Posted by | AUSTRALIA - NATIONAL, climate change - global warming |

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