Future Fund urged to take action on climate change

Oksana Patron

9 December 2022

Independent public policy institute, the Centre for Policy Development, has urged the Future Fund, which invests on behalf of all Australians and has a quarter of a trillion dollars under management, to meet its obligation to industry best practice on climate risk.

In its report “Investing for Australia: Clarifying climate risk expectations of the Future Fund”, the institute said that publicly available information indicated the Australian sovereign wealth fund lagged best practice across investment, engagement, disclosure and governance relating to climate risk.

The report recommended clearer parliamentary guidance for the Future Fund’s reporting and an expert review to examine updates to the Fund’s mandate and its Statement of Expectations.

In particular, it argued that its Investment Mandate’s update should enable the Fund to disclose and manage climate related risks and opportunities in its investments.

The closer analysis also identified gaps across the Fund’s response to climate risks in target setting, corporate engagement, industry collaboration and governance at a time when the Federal Government prepared to strengthen climate risk reporting across the Australian market.

“With almost a quarter of a trillion dollars under management, the Future Fund is a major institutional investor acting on the global stage, and it’s reasonable to expect them to play by the same rules as other major investors and asset managers on climate risk,” Centre for Policy Development Sustainable Economy Director, Toby Phillips, said.

“Global investors and capital markets are developing sophisticated responses to climate risk. By providing clear, unambiguous, expectations around climate risk, we can show leadership and put Australia’s sovereign wealth fund at the head of the pack.”