Super funds more conscious of carbon footprint

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Superannuation funds will be including an assessment of the carbon footprint of their investments within a few years, according to Mercer head of responsible investment, Asia Pacific, Helga Birgden. She said her organisation was working globally to develop a carbon rating scheme for clients.

“What we will show is a total footprint against a benchmark and what investments are contributing to that figure,” Birgden said.

“At this stage it won’t be used for rebalancing a portfolio, but fund managers who are mindful of the footprint might start talking to some of the companies in the mandate.”

Birgden said superannuation funds would initially look at the topic of carbon risk and, as they become comfortable with it, include it in overall risk strategies.

Mercer has released a new study into carbon risk and trading arguing it will become a new asset class.

“The concern about climate change and carbon emissions will present opportunities for investors,” she said.

“This will range from pure alpha generation strategies such as trading carbon emission permits through to investing in carbon related projects.”

Birgden said Mercer had already started issuing social governance ratings looking at 1,000 investment strategies and expects a carbon rating to follow.

“We are already seeing fund managers thinking about these issues,” she said.

“The question being asked is, how big are the risks of not reducing carbon footprints in investments?

“We consider the topic to be urgent and superannuation should not be taking a ‘wait and see’ approach.”