Australia’s Future Fund Joins Investor Leadership Network

The Investor Leadership Network, a platform for investors to address sustainability and long-term growth issues, announced Wednesday that the Future Fund, Australia’s sovereign wealth fund, will become the initiative’s newest member.

The Toronto-based ILM is a global advocacy network that aims to connect institutional investors and advocate members to drive progress toward a sustainable global economy, as well as promoting long-term, sustainable and responsible investment strategies.

“We are honored to become a member of the Investor Leadership Network, and we recognize the collective strength and potential of this collaboration,” said Will Hetherton, head of corporate affairs at the Future Fund, in a statement.

“We look forward to working closely with the Future Fund and leveraging their expertise to drive tangible progress across our focus areas,” said Amy Hepburn, CEO of the ILN. “Together, we will pave the way for a more resilient and sustainable economy, and we welcome the Future Fund’s contributions to this critical mission.”

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The Future Fund currently manages more than $166 billion in assets, according to the press release.

The Investor Leadership Network was launched at the 2018 G7 Summit. The network has three main initiatives: private capital mobilization—funding climate transition in developing and emerging markets; promoting diversity, equity and inclusion; and addressing climate change. The initiative is led by 13 global institutional investors that manage a combined $10 trillion in assets.

Other members – both asset managers and pension fund investors – include Alberta Investment Management Corporation, Allianz, Ardian, CPP Investments, CDPQ, Ninety One, Nordea Asset Management, Ontario Municipal Employees’ Retirement System, Ontario Teachers’ Pension Plan, the Canadian Public Sector Pension and State Street Global Advisors.

Tags: Amy Hepburn, Future Fund, G7, Investor Leadership Network, Will Hetherton

Norges Bank Investment Management, which manages Norway’s $1.4 trillion sovereign wealth fund, is telling its more than 9,000 portfolio companies that the time for talking about climate transition is over, and the time for action has arrived.

“Many companies now need to move on from disclosures and target setting to the execution phase,” Tim Smith, NBIM’s lead investment stewardship manager, said in a release. “They need to show investors credible transition plans and explain how they will ensure delivery.”

The firm published its updated expectations to provide guidance as its portfolio companies manage climate-related risks and opportunities. It presented six main expectations, which apply to all portfolio companies and will directly inform the board’s voting decisions.

Board Oversight: Company boards are expected to ensure climate risks and opportunities are integrated into corporate strategy and risk management. They are also expected to be transparent on how they establish oversight and provide details of their governance structures, mechanisms and board activities.
Climate Risk Disclosures: Companies are expected to analyze and disclose how climate risk may impact their operations, value chains and demand for their products.
Greenhouse Gas Reporting: Companies should report scope 1, scope 2 and scope 3 greenhouse gas emissions in accordance with the Greenhouse Gas Protocol. They are expected to at least seek reasonable assurance of their scope 1 and scope 2 emissions.
Net Zero 2050: Companies are expected to commit to achieving net zero status by 2050 or sooner and align their activities with the objectives of the Paris Agreement.
Interim Targets: Companies are expected to set science-based interim emission reduction targets that cover scope 1, scope 2 and material scope 3 emissions, consistent with reaching net zero by 2050.
Transition Plans: Companies are expected to implement time-bound and quantified transition plans intended to deliver on their interim emission reduction targets.

“We expect companies to manage climate risks and opportunities in a manner that is meaningful to their business model and situational context,” NBIM’s published expectations stated. “They should set net zero and interim decarbonization targets, define strategies to achieve these, and be transparent about their approach.”

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NBIM also published its opinion on the corporate use of voluntary carbon credits, saying companies should prioritize reducing their own emissions and that carbon credits should not be counted toward science-based interim emission reduction targets.

The firm stated that “legitimate concerns have been raised” about the quality of offset projects and warned that companies buying low-quality carbon credits risk overstating their emission reductions to investors.