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The report highlights the progress and challenges faced by Australian investors in addressing climate change. It is based on survey responses collected in September 2023 from 63 firms managing AU$5 trillion on behalf of Australian beneficiaries.
Key Findings
- Australian investors remain committed to climate action despite global and local headwinds.
- Investors are increasingly measuring financed emissions, even in traditionally challenging asset classes.
- Investors’ readiness for mandatory climate disclosures is mixed:
- Only 32% of respondents said they were analysing the physical climate risk in their portfolios under plausible temperature-rise scenarios. “Scenario analysis” is highly likely to become mandatory.
- 62% of respondents said they were producing TCFD-aligned reporting (up from 53% in 2022), although only 17% were getting external review or assurance.
The Investor Group on Climate Change is running an in-depth masterclass for members on scenario analysis, to help prepare for Australia’s forthcoming mandatory disclosure regime. Members can register here.
Focus areas for progress:
- More investors setting whole-of-portfolio interim targets will increase stakeholders’ confidence in reaching long-term net zero commitments.
- Increasing action is needed on adaptation and resilience to safeguard the value of investments, including;
- Investors analysing, and acting on, physical risk in each asset class,
- Improving Australia’s policy environment, including the National Adaptation Plan, to drive local investment in climate solutions.
- Continuing improvement in the policy environment to stimulate private capital investment in climate solutions, which will reduce capital flight risk.
- Enhancing corporate engagement and stewardship practices, including setting engagement targets, to accelerate industry emission reduction efforts.
- Promoting engagement and collaboration between asset owners and asset managers to improve climate-related outcomes.
Quote from Rebecca Mikula-Wright, the CEO of the Investor Group on Climate Change said,
“This year’s report shows the significant strides the industry has taken in developing and implementing climate action plans.
“However, it also shows that many investors need to focus on their exposures to physical climate risks and setting shorter term emissions reduction targets.
“With recent policy developments, and hopefully more to come, Australia’s institutional investors have a remarkable opportunity to align their portfolios with net zero, invest in the climate solutions that will power our economy for decades to come.”
The IGCC invites investors, business decision-makers, researchers, and policymakers to utilize the report’s data and analysis to inform their work in accelerating the transition to a resilient, net zero economy.
IGCC members have access to our exceptional masterclasses, working groups, and thought leadership which helps them progress their climate practice and meet their fiduciary obligations.
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About This Report
Our Annual State of Net Zero report is Australia’s most credible and comprehensive analysis of institutional investors’ net zero investment practices.
This year’s edition is based on survey responses collected in September 2023 from 63 firms managing AU$5 trillion on behalf of Australian beneficiaries.
Approximately 87% of survey respondents are IGCC members.
The report is organised around the elements of the international best-practice Investor Climate Action Plan framework; Investment, Corporate Engagement, Policy Advocacy, Disclosure, and Governance. We have also included a chapter focusing on physical risk, given the need for rapid investor action in this area.
The 2024 State of Net Zero Report is supported by a select group of IGCC’s service provider members: S&P Sustainable1, ISS ESG, JANA and Pathzero. These members have provided real world examples of tools and processes to manage climate risks and opportunities.
Lonergan research provided survey data collection and management.
Survey data analysis and editorial was solely and independently IGCC’s responsibility.
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Hear from our Director of Investor Practice on the Key Findings
Our Director of Investor Practice – Duncan Paterson – talks to the key findings from the report, and some of the key opportunities to accelerate net zero.