Pension fund-owned asset manager IFM Investors has revealed that a number of Australian superannuation funds are part of a wider group recommending “carefully targeted policy action” to unlock pension capital in order to contribute to the UK’s clean power by 2030 mission.
Namely, in a statement issued this week, IFM Investors said Aware Super, CareSuper, Cbus Super, HESTA, Hostplus and Rest have signed on to a blueprint with UK pension funds, aimed at helping the UK reach its goal.
The blueprint, regarded as a “landmark” because it represents a $3.3 trillion pool of funds managed by its signatories, recommends several reforms, including the inclusion of the net worth of illiquid infrastructure investments in the Public Sector Net Debt (PSND) for the first time.
“Reforming the fiscal rules to treat unlisted productive assets as an asset will help incentivise long-term public investment in the net zero transition, creating the conditions for NWF and GBE to crowd in pension capital at scale,” IFM Investors said.
The blueprint lays out an ambitious vision for pro-investment policies across finance, planning, renewable markets, and industrial decarbonisation.
Among its key recommendations are planning reforms that integrate the government’s legally binding emissions reduction targets into the National Planning Policy Framework, strategies to expedite the deployment of renewable energy through clear commercial objectives for GBEs and long-term contracts for difference, and a targeted focus on fostering industrial decarbonisation by supporting the commercial development of higher-risk emerging net zero industries.
“Mobilising pension fund investment has the potential to create benefits for society, but quite rightly, pension funds have a fiduciary duty and must only invest in their members’ best interests,” said Gregg McClymont, executive director, IFM Investors.
“There are a number of steps to unlocking this investment. But a prerequisite is that the government should account for infrastructure assets more like a long-term investor, and less like a commercial bank holding equity as loan collateral to be sold in a fire sale,” McClymont said.
Commenting on Aware Super’s involvement, chief executive Deanne Stewart said: “As a large global institutional investor, Aware Super can offer economies, including the UK and Australia, a valuable source of long-term and sophisticated capital to help meet net zero emission targets.
“These opportunities are also a key contributor to the retirement futures of our 1.1 million members – which include nurses, teachers, police and other essential workers.
“The enormous scale of energy transition and need for private sector capital should enable appropriate opportunities for generating strong, risk-adjusted returns for their investment portfolios, as well as strengthening the communities in which they live, work and retire.”
Speaking to InvestorDaily’s sister brand, Super Review, last month, Dianne Sandoval, head of portfolio design at HESTA, said similarly, climate solutions is an area where the fund sees opportunities for impact as a “long-term responsible investor”.
“A rapid transition to clean energy – and away from fossil fuels – can help mitigate climate change-related risks to our members’ retirement savings and create new investment opportunities. HESTA is targeting 10 per cent of our portfolio invested in climate solutions by 2030,” Sandoval said at the time.
