Cbus lays out pathway to grind down real world emissions in new climate roadmap
Cbus Super, Australia’s leading blue collar superannuation fund, has put the focus squarely on real world outcomes to reduce portfolio carbon emissions as it unveils the third iteration of its Climate Change Roadmap.
Cbus Chief Investment Officer, Kristian Fok, said the new roadmap marked a shift from setting targets and measuring emissions to accelerating the hard work of real world impact.
“As investors we need to acknowledge that reducing emissions over the next eight years to meet our 2030 target of a 45% reduction in real world emissions is going to take a lot of hard work and dedication,” Mr Fok said.
“Cbus is well and truly up to the challenge. We have made changes to how we measure and view emissions across the portfolio so members can have confidence in the progress we are making.”
“In our first roadmap, we set the expectation that all our property managers should be on a clear path to Net Zero Carbon by 2030. We have seen outstanding progress with Cbus Property’s commercial office portfolio reaching Net Zero Carbon earlier this year, eight years ahead of schedule. The portfolio has also been recognised under the NABERS Sustainable Portfolios Index as Australia’s most environmentally sustainable office portfolio. Cbus Property’s achievements show what can be achieved with genuine and cost-effective action, and our other managers are well on track. With purpose, we can reduce reliance on carbon-making activities.
“Our portfolio emissions have declined by close to 11 per cent* since our 2019 baseline. There is a long way to go but our members can be confident these achievements are setting up the portfolio to deliver better long-term returns for them and protect the environment in which they will be retiring in 20 to 30 years’ time.”
Focus firmly on real world emissions
Significantly, Cbus has changed the way it measures and reports portfolio emissions, adjusting for changes in asset enterprise values to ensure our carbon intensity reductions are not overstated. The fund has adopted the methodology proposed by the European Union (EU) in their minimum standards for EU Climate Transition Benchmarks and EU Paris-Aligned Benchmarks.
Cbus Head of Responsible Investment, Ros McKay, says the more conservative approach addresses the potential overstating effect that movements in asset valuations of a growing fund can have on our reported carbon intensity reduction.
“As the saying goes, you cannot manage what you don’t measure, but you also have to measure the right things,” Ms McKay said.
“At face value we had a 37% reduction against our 2019 baseline, but adjusting for asset valuations, we calculate our real-world emissions reduction since 2019 to be a more modest, but still significant, 10.79%.
“The transparency that we now have in this measure is liberating. It gives us a clearer view of the road to achieve 45%. We will be more certain that we have fulsomely discharged our duty to our members when we get there.
“This is why Cbus Super has invested significant time and resources in getting our emissions measurement right. We want members to have full confidence that when we say we are reducing emissions this reflects, as closely as we possibly can, actual portfolio emissions in the real-world.
“We know our emissions will not reduce in a straight line and are committed to explaining what is driving the movements in our exposures.”
Tackling embodied carbon
As part of the Climate Change Roadmap, Cbus will also launch a push on embodied carbon in the built environment sector. Embodied carbon includes emissions from the manufacturing, construction, renovation, and demolition of buildings. Our property managers will be engaged about how they can embed plans to reduce embodied carbon by 40% by 2030 and hit net zero by 2050.
“Embodied carbon has been a somewhat vexing issue, with global building stock set to double by 2050,” Mr Fok said.
“It is also where we see immense opportunities to reduce real world emissions.
“Leaning on our experience with Cbus Property and the knowledge of our construction industry stakeholders and directors, we are well placed to deploy capital into innovative projects across the built environment.”
The built environment accounts for 39% of Australia’s emissions, with embodied emissions accounting for 11% on their own. Mr Fok said the embodied carbon challenge will become more important as the transition to renewable energy picks up pace.
“The rush of recent renewables and storage announcements has really put operational emissions in our cities on the downhill run which is fantastic to see,” he said.
“We are on the lookout for opportunities to invest in new manufacturing and construction practices, the repurposing and upgrading of existing building stock and the recycling of construction materials. The embodied carbon sector is in the starting gates, and we can see opportunities to invest in solutions and projects that will generate strong returns and support the industries that are important to Cbus members.”
Media enquiries: Tristan Douglas, 0417 736 434 or email@example.com
*Our net zero target refers to Scope 1 and 2 emissions and currently encompasses over 70% of Cbus’ portfolio including listed equities, property and infrastructure. While we will work to expand the asset classes covered by our net zero goal, with a near-term focus on credit, debt and private equity, certain asset classes are currently excluded.
This information is about Cbus and doesn’t take into account your specific needs. You should look at your own financial position, objectives and requirements before making any financial decisions. Refer to Cbus Product Disclosure Statement, Target Market Determination and Financial Services Guide for more information. Call 1300 361 784 or visit cbussuper.com.au for a copy.
Cbus is the leading Industry Super Fund representing those that help shape Australia. As one of Australia’s largest super funds, we provide superannuation and income stream accounts to more than 850,000 members and we manage more than $70 billion of our members’ money (as at 30 June 2022). Our members include workers and retirees, their families and employers. As of April 2022, Media Super is now a division of Cbus, offering Media Super products. For more than 30 years Media Super has been the industry super fund for Print, Media, Entertainment and Arts, and broader creative industries.
Issued 3 November 2022. United Super Pty Ltd ABN 46 006 261 623 AFSL 233792 as Trustee for the Construction and Building Unions Superannuation Fund ABN 75 493 363 262 (Cbus and /or Cbus Super).