Investor climate group welcomes Australian senate enquiry into carbon bubble

Greens-led inquiry to question sovereign wealth fund, the Future Fund

Investors have welcomed the Australian Green party’s setting up of a Senate Inquiry into how companies report their investments in fossil fuels and their exposure to the carbon bubble.

The senate voted today to establish the Senate Economics References Committee Inquiry into Carbon Risk Disclosure, which will report by June 22.

The aim is “to bring information about the carbon intensity of the financial sector into the open” with Greens Deputy Leader Larissa Waters saying companies make it hard work to find out whether individuals’ superannuation and savings are helping to address global warming, or are actually making the problem worse.

The Investor Group on Climate Change (IGCC), the collaboration of Australian and New Zealand investors with combined assets of over A$1trn (€645bn), welcomed the move, calling it an “important milestone”.

IGCC Chief Executive Emma Herd said: “Better collaboration between industry and financial policymakers on long term carbon risk management will increase Australia’s carbon competitiveness and resilience to the economic impacts of climate change.”

“If the money from Australian banks and Australian superannuation funds keep flowing into fossil fuels, we will keep exacerbating global warming and blow our cash on what will certainly become stranded assets,” Waters said. She added she is looking forward to questioning the state fund, the A$118.4bn Future Fund about the processes they are putting in place to “protect the nation’s savings from the risk of the carbon bubble”.Waters subjected David Neal, Managing Director of the Future Fund Management Agency, to a grilling over its fossil fuel holdings in October at a Finance and Public Administration Legislation Committee meeting in Canberra.

Her colleague, Finance Spokesperson Peter Whish-Wilson noted there are emerging voluntary frameworks for carbon risk and disclosure in Australia and globally – “but it seems there is no standardisation”. He pointed to France’s new mandatory disclosure for investors. He called the new Inquiry a “critical stocktake” given that it was as “clear as mud” which regulators are responsible for managing systemic carbon risk in Australia.

“The Governor of the Bank of England, Mark Carney, himself is taking the lead in the UK on this issue. This Inquiry will find out whom, if anyone is doing that work here in Australia,” he concluded. Link

The terms of reference of the inquiry:

  • Current and emerging international carbon risk disclosure frameworks
  • Current carbon risk disclosure practices within corporate Australia
  • Australian involvement in the G20 Financial Stability Board discussions on carbon risk impacts
  • Current regulatory and policy oversight of carbon risk disclosure across government agencies