HESTA is calling on the Australian Government to encourage large-scale investment in a green recovery by setting a 2050 ‘net zero’ emission reduction target and providing a clear pathway towards transitioning our economy to a low-carbon future.
In its submission to the Government’s Technology Investment Roadmap discussion paper, HESTA warns that without urgent climate action, global investors will be increasingly unwilling to invest in Australia as they manage climate change risk.
HESTA CEO Debby Blakey said: “Domestic investment opportunities with appropriate scale and long-term contractual certainty are relatively rare.
“While we want to invest more here, for every $1 we have invested in Australian renewables, we have $3 committed to equivalent assets overseas. These assets are in countries that provide stable, predictable policy settings, which have given us the confidence to make long-term investments.”
Ms Blakey said institutional investors like HESTA have an important role to play in the push to de-carbonise Australia’s economy but a key risk to members was a disorderly, rushed transition.
“We are at a critical juncture – the time to choose and commit to a low-carbon economy is now. We don’t want to see a carbon-led recovery that locks in long-term emissions and increases the risk of assets becoming stranded,” Ms Blakey said.
“Climate change represents a financial risk and leading global investors are already putting in place strategies to drive down the carbon in their portfolios and invest more in opportunities arising from the need to transition the world economy.”
Ms Blakey said there were potentially trillions of dollars of global investment up for grabs, with governments around the world already attracting green capital through setting stable, long-term policy.
“In Australia alone we have an incredible opportunity to attract not only global investment but to draw on the almost $3 trillion pool of superannuation savings to power a green-led recovery from COVID-19. But there is growing global consensus from investors and business leaders about the urgent need to set long-term emission reduction targets.
“By getting the policy settings right, super funds like HESTA would have significant appetite to invest more in renewable infrastructure in Australia,” Ms Blakey said.
HESTA recently announced an ambitious Climate Change Transition Plan (CCTP) that will see the $52 billion industry super fund commit to reducing the absolute carbon emissions in its investment portfolio by 33% by 2030 and to ‘net zero’ by 2050.
In its submission to the Technology Investment Roadmap discussion paper, HESTA makes a series of recommendations including:
· Committing to net zero emissions by 2050
· Recognising a limited role for gas in the transition
· Removing barriers to long-term investment
· Enabling innovative investment partnerships and structures to boost Clean Tech investment.
Ms Blakey said Australia needs only to look ‘across the ditch’ to see examples of the long-term vision and commitment to climate action investors were seeking.
“New Zealand’s Parliament has agreed to long-term Paris Agreement-aligned emission reduction targets and established a Climate Change Commission to deliver an annual carbon budget and report transparently on progress,” Ms Blakey said.
“Investors are looking for this kind of bipartisan vision for how Australia will rise to the challenge of transitioning our economy and a clear roadmap for how we’re going to get there.
“We’ve seen how we can achieve amazing things together through COVID-19 and it’s time to apply this innovative mindset to addressing climate change. Our members and the investment community need leadership on climate change – and they need it now.”
