Australian Pension Fund Commits to Becoming Net Zero by 2050

HESTA also pledges to reduce portfolio’s carbon emissions by one-third within 10 years.


A $52 billion ($36.2 billion) Australian superannuation fund HESTA said it is the first major Australian superannuation fund to commit to reducing its investment portfolio’s absolute carbon emissions by one-third within 10 years and becoming “net zero” by 2050, which is in line with the goals of the Paris Agreement.

“Climate change presents a financial risk to the HESTA investment portfolio and the world in which our members will retire,” Debby Blakey, CEO of HESTA, said in a statement.

The fund said it is developing a climate change transition plan (CCTP) that will introduce carbon reduction targets for the HESTA investment portfolio to manage financial risks while looking for investment in opportunities within the low-carbon transition.

“Our climate change transition plan is set to be one of the most comprehensive of its kind undertaken by a superannuation fund. It maps out how we’re going to manage climate risk, align our actions to a below-two-degrees world and support the transition to a low-carbon economy,” Blakey said.

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Blakey said the CCTP would support investment decisionmaking throughout the portfolio and would be informed by ongoing research and developments in investment practice.

“An urgent response is required and the actions within the climate change transition plan have been thoughtfully and carefully designed to provide an effective and tangible response,” Blakey said.

HESTA said it will pursue “real-world economy change” through engaging with material holdings and managers to address not just medium-term transition risks, but opportunities as well. It also said it will monitor and report progress against its emissions reduction targets on an annual basis.

In 2014, HESTA became the first major Australian super fund to place a restriction across all investment options on thermal coal mining, and it recently extended the restriction to further eliminate the financing of potentially stranded assets.

HESTA cited the United Nations Intergovernmental Panel on Climate Change, which says global emissions need to reach net zero by 2050 to create a reasonable chance of limiting global warming to 1.5°C above pre-industrial levels.

“If efforts to improve the current trajectory of global warming are not successful, we can expect an increase in the severity and frequency of damage from the physical impacts of climate change,” Blakey said. ”There is no doubt that the social, environmental, and economic cost of inaction is going to be far greater than the cost of responding to climate change.”

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Japanese Pension Fund Loses $77 Billion in Fiscal 2019

The world’s largest retirement system is the lowest it’s been valued in roughly three years.


The world’s largest pension fund lost $77 billion in its 2019 fiscal year, thanks to the pandemic-induced market downturn in its final quarter. 

The Government Pension Investment Fund (GPIF) in Japan dropped to ¥150.6 trillion (US$1.4 trillion) in assets after losing 5.2% in its most recent fiscal year ending March 31, according to a Friday report

That’s the lowest the Japanese pension fund has been valued since 2016. Whatever gains the GPIF made prior to the pandemic were erased by a ¥17 trillion ($158 billion) drop just in its fourth quarter. 

A GPIF representative did not respond to a request for comment. 

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The GPIF has recently sought out active and passive managers to diversify its portfolio with foreign bonds, which are the only asset class to have generated positive returns for the retirement system in the past year. 

In the 2019 fiscal year, foreign bonds gained 3.6%. Meanwhile, Japanese domestic bonds lost 0.36%, domestic equities dropped 10%, foreign stocks were down 13%, and short-term assets slipped 0.04%. 

In April, the GPIF said it increased its target allocation for foreign bonds to 25%, up from 15% in March. The pension system, which owns one-tenth of all Japanese equities and 1% of global equities, has been shifting away from Japanese bonds as the country tumbles into its first recession in roughly five years. 

In April, the pension fund said it has created its own data and analytics portal to boost its oversight of index providers.

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