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, Patrizia (formerly 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 a legally binding international treaty to combat climate change and address the effect it has on the global environment. The overarching goal of the agreement is to limit global average temperature rise to well below 2°C above pre-industrial levels, and pursue efforts to limit the temperature rise to 1.5°C 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 risks and opportunities report)
- disclosure of the metrics used to assess and manage climate-related risks and opportunities (referenced in our Climate change risks and opportunities 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 2022, working with our asset consultant Patrizia, 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.
Physical risks to property and infrastructure
We asked climate risk experts, Moody’s (formerly Four Twenty Seven) to assess the physical risk of our property and infrastructure assets. We use this assessment to develop and strengthen climate risk mitigation strategies to protect the long-term investment objectives of our property and infrastructure assets.
Climate hazard Description Floods Change in rainfall conditions and size and frequency of possible floods Heat stress Increase in temperature Hurricanes & typhoons Exposure to past cyclones Water stress Change in water supply and demand Sea level rise Heightened storm surge, augmented by sea level rise Wildfires/Bushfires Change in fire-risk potential
Sustainable direct investments around the world
Our wind farm investments
In support of Australia’s renewable energy infrastructure goals, Prime Super has purchased three wind farms. Mortons Lane wind farm, Ferguson wind farm and Diapur wind farm are all located in various locations throughout regional Victoria, Australia. On behalf of our members, Prime Super holds 100 per cent ownership of the three wind farms. According to our investment consultant, Patrizia, the wind farms collectively generate enough clean energy to power more than 42,700 Victorian households.
Savant Energy delivers renewable energy solutions to developers and occupiers of apartments, retirement villages, shopping centres and office buildings across Australia. The renewable energy will be sourced from a portfolio of solar and battery assets, along with the installation of onsite solar, battery, EV chargers and meters