Industry super-backed IFM Investors quits government carbon scheme

A growing number of high-profile companies, including the industry super fund-owned IFM Investors, are pulling out of Canberra’s net zero carbon emissions scheme.

The Commonwealth’s Climate Active carbon scheme is under pressure as big corporates quit amid integrity concerns.

The $230bn industry super fund-backed IFM Investors has quit the federal government’s net zero carbon emissions scheme, joining the growing number of corporates turning their back on the offset program as the sector battles greenwashing accusations.

IFM – owned by 16 superannuation firms including AustralianSuper, Cbus and Hesta – is among a string of high-profile businesses to abandon the Climate Active scheme in recent weeks.

The $326bn listed wealth manager Insignia Financial, $200bn fund manager Perpetual, payments provider Tyro and accounting software player Xero have also left the program amid ongoing uncertainty around whether the flagship voluntary emission reduction scheme will be maintained.

Indeed, more than 100 companies had already left Climate Active in the last 18 months. The program offers certificates to those engaged in carbon abatement, and allows users to purchase carbon credits to offset their emissions with the aim of hitting net-zero targets.

Questions over the credibility of some purchased credits remains an issue within the industry although supporters of the government program say it is an important tool for encouraging corporate climate action. Telstra, NRMA and Australia Post have already pulled out of the scheme.

Accounting software firm Xero said: “As part of our focus on decarbonising our operations, we’ve chosen to prioritise science-aligned emissions reductions rather than carbon offsets.”

The latest exits may further fuel expectations that the next federal government could move to scrap the regime altogether when Australians go to the polls on May 3.

A decision about the future direction of the Climate Active program is yet to be made, according to the Department of Climate Change, Energy, the Environment and Water.

“The Climate Active program continues to operate as usual, following the Climate Active Carbon Neutral Standard,” a department spokesman said.

IFM Investors chair Cath Bowtell. Picture: NewsWire/Nicki Connolly

“The government has now assumed a caretaker role, which means no decision will be made relating to Climate Active reforms during this period. A decision on any reforms of the Climate Active program will be a matter for the future government.”

He said the number of businesses participating in Climate Active had remained broadly steady since 2023 with overall certification numbers continuing to increase.

In February, Assistant Climate Change and Energy Minister Josh Wilson held a series of meetings with organisations such as the Carbon Market Institute, assuring the industry that there were no plans to dismantle Climate Active.

A government spokesman said at the time the Coalition had established Climate Active, and that Labor was now trying to fix the issues in the scheme.

The super-backed asset management giant IFM became Climate Active-certified in August 2023 as part of its drive to net zero emissions. IFM said on Monday it was no longer participating in Climate Active but declined to provide further comment.

In its last Climate Active report, IFM said it supported high-quality independently verified carbon reduction and removal developments including the Lynwood Human-Induced Regeneration project in NSW which excludes livestock from grazing areas, ­allowing for forest regrowth. It also purchased and retired carbon offsets from schemes in the US, Turkey and Mexico.

IFM has been among the frontrunners in pushing for greater ambition in net zero goals.

It was among the investment-chasing industry super funds last year that pushed the British government for reforms to make it easier to invest in that nation’s net zero transition.

The use of carbon abatement contracts is controversial, with critics arguing emitters should be taking more active steps to reduce their carbon dioxide output, rather than offsetting it.

Insignia, formerly known as IOOF, declined to comment. It’s understood the financial services company now handles its carbon commitments in-house rather than through the government’s Climate Active scheme.

Perpetual, which owns Pendal, also withdrew from the climate program, but did not respond to a request for comment before deadline.

Macquarie Group CEO Shemara Wikramanayake. Picture: John Feder

Payments operator Tyro said the company initially sought certification to be carbon-neutral with Climate Active by investing in projects to offset its carbon emissions.

“Moving forward, we recognise the need to remove carbon emissions from our operations altogether and instead plan to set emission reduction targets and abatement strategies to help us decarbonise,” a spokeswoman said. “Tyro is committed to driving a sustainable future for our business, our customers and the community.”

In January, Association of Superannuation Funds of Australia chief executive Mary Delahunty said super funds’ climate goals could be hampered by the anti-ESG movement, with engagement potentially less effective as corporates backtrack on the green agenda.

Macquarie Group quit the world’s largest climate banking alliance, making it the first major Australian financial institution to retreat since US President Donald Trump took office in January. The alliance, which includes Australia’s four largest banks and the Bank of Queensland as members, aims to cut net emissions to zero and limit the impact of climate change.

RepuTex said in January the value of Australian Carbon Credit Units rose to total $1.1bn in 2024, a 28 per cent increase from 2023 when the market was worth $871m. RepuTex said the increase was driven by heavy emitters meeting commitments. The carbon research and advisory company said some 35 million ACCUs were traded last year – as Australia’s scheme became the fifth biggest carbon-compliant scheme in the world.