Major Australian Fund Recalibrates Climate Change Reporting

Cbus Super, one of Australia's largest public offer industry superannuation funds, has put the focus directly on real world outcomes to reduce portfolio carbon emissions.

Unveiling the third iteration of its Climate Change Roadmap, Cbus Chief Investment Officer, Kristian Fok, said the new roadmap marked a shift from setting targets and measuring emissions to accelerating the hard work of real world impact.

Fok also highlighted that the first two roadmaps were already paying off for fund members in terms of emissions reductions and progress on targets.

“In our first roadmap, we set the expectation that all our property managers should be on a clear path to net zero carbon by 2030. We have seen outstanding progress with Cbus Property’s commercial office portfolio reaching net zero carbon earlier this year, eight years ahead of schedule.”

“As investors we need to acknowledge that reducing emissions over the next eight years to meet our 2030 target of a 45% reduction in real world emissions is going to take a lot of hard work and dedication,” Fok said.

More Conservative Approach

Significantly, Cbus has changed the way it measures and reports portfolio emissions, adjusting for changes in asset enterprise values to ensure carbon intensity reductions are not overstated.

The fund has adopted the methodology proposed by the European Union (EU) in their minimum standards for EU Climate Transition Benchmarks and EU Paris-Aligned Benchmarks.

Cbus Head of Responsible Investment, Ros McKay, says the more conservative approach addresses the potential overstating effect that movements in asset valuations of a growing fund can have on reported carbon intensity reduction.

“As the saying goes, you cannot manage what you don’t measure, but you also have to measure the right things,” McKay said.

“At face value, we had a 37% reduction against our 2019 baseline, but adjusting for asset valuations, we calculate our real-world emissions reduction since 2019 to be a more modest, but still significant, 10.79%.”

“The transparency that we now have in this measure is liberating. It gives us a clearer view of the road to achieve 45%. We will be more certain that we have fulsomely discharged our duty to our members when we get there.”

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