Australian Ethical on IPCC report: Australia has failed Paris agreement, but switching to “Green” super is our best solution
Everyday Australians have an opportunity to address the dire findings of the recently released Intergovernmental Panel on Climate Change (IPCC) Report using our globally significant $3 trillion of super, according to Australian Ethical (ASX: AEF).
The IPCC Report showed that Australia has already warmed 1.4 degrees since 1910 and that in every realistic scenario analysed, Australia will fail to meet the Paris agreement 1.5-degree warming target.
However, the report also showed that strong and sustained reductions in emissions of carbon dioxide (CO2) and other greenhouse gases would limit climate change, and pointed to a need for governments, businesses, and everyday people to take action to set and beat net-zero emissions targets.
Australian Ethical believes the fastest and most effective way of driving this action - in the continued absence of governmental targets - would be for everyday Australians to switch their super to a climate-friendly fund.
This is based on Australian Ethical calculations that show that if this were to happen, it would collectively result in a carbon footprint reduction that is equal to half of Australia’s entire household emissions.
Australian Ethical calculated that the difference between putting Australia’s $3 trillion pool of super into a climate-friendly fund, versus one that was not, was equivalent to a lower carbon footprint of around 78 million tons of carbon (CO2e) per year, or the same as:
4.6 million average Australian households (half the total number of households in Australia),
16.9 million cars on the road (close to the total number of cars in Australia of 20 million),
1 million tankers of petrol, or
3.3 million garbage trucks of waste being recycled instead of going to landfill every year (the equivalent of 3 tonnes of waste per Australian household).
Super is often the largest lump sum of savings many of us hold at any given point, with the average Australian balance ranging between $24,000 (25 years old) and $523,000 (65 years old).
Individuals who redirect these funds into climate-friendly companies could help too, collectively, drive governments and businesses to take action to set and beat the net-zero emissions targets needed to achieve strong and sustained reductions in emissions of carbon dioxide and other greenhouse gases.
And while ceasing to invest in carbon-intensive companies does not actually stop the emissions produced by those companies overnight, large-scale selling of shares in these companies sends a strong public signal and makes it far harder for them to raise new money.
This could quickly drive a positive change in the behaviour of these companies, or even render them unviable if they continue to pollute at the same levels according to Australian Ethical.
John McMurdo, CEO of Australian Ethical, said: “The IPCC’s new report is damning. It shows Australia may be beyond saving from the damages of climate change.
“However, all is not lost. If governments, businesses, and consumers all take drastic action towards net-zero targets, we can significantly improve our prospects and minimise the damage.
“We must stop supporting fossil fuels and high carbon-emitting companies with our money, and the best way the average Australian can do this may be by switching their super to a climate-friendly fund.
“An added bonus is that it doesn’t require making any personal or financial sacrifices. Ethical funds can also be some of Australia’s best performing.”
To reach the above figures, Australian Ethical calculated the difference between the carbon footprint of investment in the MSCI World Index and the MSCI World Climate Paris Aligned Benchmark Select Index.
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Australian Ethical (www.australianethical.com.au) is Australia’s original responsible investment and fastest-growing super fund manager, with a 34-year track record, over $6 billion in Funds Under Management (FUM), and above-market returns in its premium products.
Australian Ethical offers eight managed funds and 13 investment options in its superannuation fund. These are managed by an in-house team of investment professionals consisting of sector specialists with an average of over 16 years’ experience, and an internal ethics team with a separate reporting line. Every decision made by both teams is guided by the Australian Ethical Charter and its responsible investment philosophy. The investment team combines the most comprehensive ethical assessment process in the market with fundamental bottom-up stock analysis that goes far deeper than generic ESG investing.
Australian Ethical is rated as one of the top-performing super fund and investment managers by Super Ratings, Chant West, Morningstar, Money Magazine, Rainmaker, Forbes, and Financial Standard.
Recently, Australian Ethical was awarded:
1 of just 6 global leaders for ESG commitment, and the only Australian asset manager, by Morningstar
Australian Ethical Super’s Australian Shares option ranks no.1 over 5 years, 7 years and 10 years according to the SuperRatings Fund Crediting Rate Survey as at 31 December 2020
Australian Ethical Super’s Balanced option was ranked no.2 in the SuperRatings Fund Crediting Rate Survey – SR50 Balanced (60-76) Index over 1 and 3 years as at 31 December 2020
Emerging Companies Fund (Wholesale) and the Diversified Shares Fund (Wholesale) 5-star rating by Canstar
Money Magazine Best of the Best Award: ESG Trailblazer
Finder.com.au Green Superannuation Fund of the Year
SuperRatings Infinity Award for best sustainable super fund
Financial Standard Investment Leadership Award: ESG - Australian Equities