Super fund ART plans to pressure companies to slash emissions and sets a new net-zero road map

Australia’s second largest super fund will target 88 listed companies to slash their carbon footprint and link the pay of its own investment team to climate metrics.

Australian Retirement Trust chief investment officer Ian Patrick.

Australian Retirement Trust has committed to pressuring 88 companies to slash their carbon footprint, setting a new “net zero” road map to cut emissions in its portfolio of equities, infrastructure and real estate investments by 43 per cent by 2030.

Australia’s second-largest super fund said that it would start voting on all climate-related shareholder proposals in the Australian market and would link the remuneration of its own investment team to climate change performance.

“At the end of the day, this is a question of the world as a whole, reducing real-world emissions,” Ian Patrick, chief investment officer of the $260bn fund said.

“The maximum impact we can have is through engagement with all companies, but particularly the higher emitting companies.

“And if we can conduct that engagement effectively, that’s going to have the most impact – and that’s our objective.”

The new road map follows the fund’s commitment last year to an investment portfolio with net zero greenhouse gas emissions by 2050.

The fund said it reviewed “priority companies” – those contributing more than two thirds of its listed equities which financed emissions – and found that only 8 per cent of them were “aligned to a net zero pathway”.

It wants to increase that proportion to over 20 per cent by 2025, and expects that by 2030 half of them will be either aligned or already “achieving net zero”, according to its new targets.

By 2040, all priority companies should be either achieving or in line with the net zero pathway, according to the fund’s new “net zero 2050” road map, which was published on its website this week.

ART will “assess the position” of those 88 companies, actively engage with them and “actively vote at annual general meetings for all priority companies from their first AGMs, after 1 July 2024,” the document says.

The report does not mention the companies that will be targeted but according to its 2022 sustainable investment report published last November, the three largest emitters in its listed portfolio are South32, BHP, and Origin.

Santos, Woodside, Rio Tinto, AGL, Alumina, Incitec Pivot and BlueScope Steel rounded up ART’s top-10 emitters among its listed equities portfolio, the report shows.

The number and composition of the “priority” group would change over time, it said.

ART head of sustainable investment Nicole Bradford said a key part of the road map was “working with the companies” in which the fund invests.

“Stewardship is a fundamental component of this road map, which is engagement and proxy voting. We will have direct engagement with this substantive part of those financed emissions and particularly in the Australian environment,” she said.

Ms Bradford added the fund’s voting would “help send a signal if we don‘t believe the companies are focusing on the right issues or they’re not moving as fast as we would hope that they progress.”

She said ART was also planning to set a target for climate-related investments later this year.

The Australian Conservation Foundation welcomed ART’s new climate ambitions but criticised the targeted 43 per cent cut in emissions by 2030 from the 2021 level.

“One of Australia’s largest superannuation funds adopting a 2030 emissions target and an escalation framework sends a message to big polluters that climate inaction will have consequences at board level,” ACF corporate campaigner Jonathan Moylan said.

“A growing number of Australians want their superannuation funds to be protecting their retirement years from the impacts of the climate crisis.”

The group said the fund had acknowledged it needed to tackle biodiversity risks, but it had not addressed that in its new road map.

“This is genuine progress, but the surging nature of the climate crisis demands bolder commitments from such a powerful player,” Mr Moylan said.

Originally published as Super fund ART plans to pressure companies to slash emissions and sets a new net-zero road map