Climate change will have a significant effect on the environment, along with communities and economies of the world.
From an investment perspective, climate change is a risk that must be considered in the long-term assessment of an investment, and its ability to generate a satisfactory return into the future. Appropriate management of climate change risks will lead to better long-term outcomes for our members.
We have a Climate Change Policy which enhances our investment strategy and must be considered in the acquisition and retention of our investments. This policy commits us to:
- influence companies in which we invest to make climate change a key area of risk focus, and
- make investment decisions that have regard to the risks of climate change.
Commitments from our external investment experts
We manage our investments with our investment consultant and investment managers. Our investment consultant, Whitehelm Capital, is a signatory to the United Nations backed Principles for Responsible Investing (UNPRI), a member of GRESB Infrastructure and a supporter of Taskforce for Climate Related Financial Disclosures (TCFD).
The ESG capabilities of external investment managers are considered during the assessment and evaluation of those managers prior to selection and those capabilities are monitored periodically.
The Paris Agreement
The Paris Agreement is an internationally-recognised binding agreement to commit to combat climate change and address the effect it has on the global environment. The objective of the agreement is to limit global temperature rise to below 2 degrees Celsius above pre-industrial levels. We support the objectives of the Paris Agreement.
Taskforce for Climate-related Financial Disclosures (TCFD)
It is our responsibility to consider the physical and investment-related risks of climate change and the impact a transition to a low carbon economy has on our portfolio. Prime Super is a supporter of the TCFD which has developed a framework for financial organisations to improve their reporting of climate-related information to investors, lenders, insurers, and other stakeholders. It suggests financial organisations report climate-related risks and opportunities using a framework that addresses four key areas:
- governance around climate-related risks and opportunities (see Our governance section below)
- strategy - the actual and potential climate-related risks and opportunities (see Responsible investment page)
- risk management - how climate-related risks are identified, assessed and managed (described in our Climate Change Risk Report)
- disclosure of the metrics used to assess and manage climate-related risks and opportunities (referenced in our Climate Change Risk Report).
Our Climate Change Risk Report identifies climate-related risks and opportunities of our investments, along with how we manage climate-related risk. We have used the TCFD framework as the basis for our analysis. Our first report was produced in 2020 and it will be updated annually.
Climate change is addressed in our investment governance policies and procedures, including our Investment Governance Framework, Risk Management Framework, ESG Policy, Climate Change Policy and Proxy Voting Policy. These policies outline the fund's approach to responsible investment and climate change issues. They apply to the fund, and also to our investment consultant and investment managers.
Our current investments
In 2020, working with our asset consultant Whitehelm Capital, we engaged two independent climate risk experts to help us understand our transition and physical risks across all our equities portfolio and our Property and Infrastructure portfolio.
We engaged Sustainalytics, a global leader in ESG and Corporate Governance research and ratings, and using Sustainalytics’ carbon research, we conducted an assessment on our listed equities portfolio to better understand our carbon transition risks. We use this data to consider the carbon footprint of our equities portfolio and how we compare to industry benchmarks.
Property and infrastructure
We asked Four Twenty Seven to undertake a physical risk assessment of our property and infrastructure assets. Four Twenty Seven is an affiliate of Moody’s Corporation, and is a leading provider of data, market intelligence and analysis related to physical climate and environmental risks. We use the assessment to develop and strengthen climate risk mitigation strategies to protect the long-term investment objectives of our property and infrastructure assets.
We also make other direct investments in Australia and around the world:
We have a number of direct investments that reflect our ESG policies, including our Climate Change Policy:
- 313 Adelaide Street, Brisbane
We acquired a 100% stake in 313 Adelaide Street in December 2019. The building has a 5-star NABERS Energy Rating and 4-star NABERS Water rating. NABERS Energy Rating measures the efficiency of an office building and compares its energy consumption against a set of benchmarks developed using actual data. NABERS Water Rating looks at the amount of water used and recycled in a building.
- Storrun Vindkraft AB
We hold a majority interest in Storrun Vindkraft AB, a 30MW operating windfarm in Jämtland, Sweden. Storrun generates c. 65,000 MWh of electricity annually with zero carbon emissions. Storrun has been awarded an excellent ESG score by our investment advisor based on an independent scoring methodology.
- SAREN Energy AS
We hold a 75% stake in two energy-from waste plants in Sarpsborg and Fredrikstad, Norway.
- Sarpsborg Avfallsenergi AS (SAE)
SAE is an internal waste incineration and heat generation plant has an installed capacity of 32.4 MW and an annual gross production of 255 GWh. The feedstock is up to 90,000 tonnes of waste per year of household and commercial waste.
- Kvitebjorn BioEl AS (KVB)
KVB is a waste incineration and energy generation plant with multiple outputs that was commissioned in 2008. The plant supplies heat to a local district heating network, steam to industrial customers and electricity. Each year, the plant processes up to 60,000 tonnes of sorted household and commercial waste.