Future Fund, the largest fund in Australia, has rejected its invitation to increase its transparency about the way it plans to manage the risks of climate change to its portfolio.
Two years ago in a FOI search it was revealed that despite many investors warning of particular risks to long-term investors such as the Future Fund, it had not once mentioned climate change in any of its Board meetings.
Now, despite the development of Australia’s own carbon pricing scheme, its links with international ones and further developments in the low carbon economy, the Future Fund sees no benefit to giving the issue further attention and providing stakeholders with clarity about its strategies to protect its portfolio. In a letter to the Asset Owners Disclosure Project, the $75 billion fund claimed it suffered “resource constraints.”
Asset Owners Disclosure Project (AODP) Chair Dr John Hewson said: “It is quite extra-ordinary that Australia’s largest fund which will have to supply pension liabilities over the long-term has decided not to come clean over its climate position.”
“While investors all over the world continue to build understanding of how to to protect themselves from the market and physical impacts of climate change, the Future Fund thinks it is immune. It needs to come clean.”
The former head of the Future Fund David Murray was what was known as a climate denier, someone who actually refuted the conclusions of the scientific community regarding climate change.
Dr Hewson said: “This isn’t about science, this is about risk, and thus the risks to the assets in the Future Fund portfolio. There are many ways in which we could see a rapid shift to the low carbon economy in the coming years. Under any of those scenarios, we will see rapid direct or indirect repricing of carbon, and then the Future Fund will be unable to sell any stranded assets and so it must start planning now.”
“Australia’s retirees cannot afford another sub-prime crisis,” he added.
John Connor, CEO of the Sydney-based Climate Institute, which operates AODP in Australia, added: “As a carbon and resource intensive economy, Australia has a massive risk exposure to climate change and its regulation. For our largest pool of capital to ignore this is a problem for government and regulators but
most of all for citizens and taxpayers who are entitled to know what the board of guardians are actually doing.”
The AODP issued disclosure requests to the world’s largest 1,000 asset owners in August and will publish its first global index of funds later this year. AODP is chaired by former leader of the Liberal Party Dr John Hewson AM. Board members include General Secretary of the ITUC Sharan Burrows, former head of risk at Goldman Sachs Bob Litterman and Dr Andrew Hilton OBE, Director of the London-based Centre for the Study of Financial Innovation.