Climate Spectator says the chief executives of nine of the biggest investment managers and superannuation funds in the country – including Colonial, AMP and BT – have stepped into the carbon price debate, calling for clarity and certainty on climate change policy and forming a high-level panel to have input on the design of a carbon price.
The CEOs, who lead institutions that account for more than $350 billion under management, or about one third of the total in Australia, say clarity is needed if the managers are to make sensible decisions about any long-term investments, and to unlock the capital needed.
They intend to take their campaign to Canberra, where they will lobby politicians on all sides, and will also seek meetings with the heads of the companies they invest in, to establish a dialogue on the issue.
The call adds to the momentum generated by the election results, the dramatic intervention of BHP Billiton boss Marius Kloppers, and calls from numerous other industry leaders and think tanks for Australia to resolve the uncertainty around climate change policies and the path for emission reductions.
And it comes as the head of the newly created Centre for Climate Economics & Policy at the Australian National University, Frank Jotzo, calls for Australia’s 2020 emission reduction target to be lifted to 15 per cent from its current unconditional commitment of a 5 per cent cut on 2000 levels. Jotzo argues that enough has occurred on the international front to warrant the increase.
The list of CEOS includes Mark Lazberger, the head of the country’s largest funds manager, Colonial First State Global Asset Management, Stephen Dunne, the head of AMP Capital Investors (the second biggest), and Ian Silk, the head of Australian Super, the largest industry superannuation fund.
It also includes the heads of fund managers BT Investment Management, and BlackRock, and super funds Cbus, Hesta Super Fund, UniSuper, and Catholic Super. They represent the nine largest members of the Investor Group on Climate Change, which accounts for more than $550 billion under management.
The intervention is significant because, while funds managers and super funds have been active on climate change issues through organisations such as the Investor Group on Climate Change, the CEOs have rarely been engaged and have delegated the issue to other executives, sometimes as far down as those charged with CSR (corporate social responsibility) issues – a situation that still exists within many fund management and most broking houses in Australia.
However, there is growing recognition that carbon pricing will impact long-term investments, and the sooner that is formally recognised in policy design, the better for all.
Australian institutions allocate less than 1 per cent of their portfolios towards low-carbon technologies and businesses, and have said that they will not do so unless the policies are in place to encourage such investment.
Colonial’s Lazberger said the current uncertainty surrounding carbon pricing was hindering investment decisions across both emissions-intensive and low-emissions assets. “To allow sensible long term investment decisions, the framework for pricing emissions must be resolved,” he said.
David Atkins, the head of Cbus said private sector was expected to contribute around 85 per cent of the capital required to put the economy on a low-carbon growth path. “Only policy frameworks that are transparent, long term and credible will result in substantial private low-carbon investment.
The nine CEOs had a briefing last week with Ross Garnaut, who outlined the economic case, and the possible investment impacts, of emission reduction trajectories. He made it clear that this would require a fundamental shift that would require clear rules and a transition path.
The IGCC has a representative, CEO Nathan Fabian, on the business roundtable that will feed its views into the multi-party climate change committee that is considering options for a carbon price and is likely to deliver its recommendations by the end of next year.
The nine CEOs will act as a reference point for Fabian for feedback on policy initiatives, but will also take their case directly to politicians and the industries they invest in.
The IGCC favours a market-based mechanism – preferably with a free-floating carbon price set by an emissions trading scheme – as the most efficient means of providing the necessary incentive to reduce greenhouse emissions.
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