The IPCCs latest climate assessment may have caused a new wave of anxiety over the planets future, but ethical fund managers say it could also be the perfect opportunity for Australians to put their money where their mouth is.
John McMurdo, the head of ASX-listed Australian Ethical Investments, this morning said investors have already been voting with their wallets by switching to climate-friendly funds during the past 18 months, and last nights report was merely another prompt to stop supporting fossil fuels and high carbon-emitting companies.
If Australias $3 trillion pool of super was all directed into climate-friendly funds, it would be equal to removing 78 million tons of carbon from the atmosphere, according to Australian Ethical Investments. Credit:Janie Barrett
He said Australians switching their super to a climate-conscious fund could quickly drive a positive change in the behaviour of many companies, or even render them unviable, if they continue to pollute at the same levels.
If governments, businesses, and consumers all take drastic action towards net-zero targets, we can significantly improve our prospects and minimise the damage, Mr McMurdo said.
The best way the average Australian can do this may be by switching their super to a climate-friendly fund.
Australian Ethical calculations released this morning showed that if this were to happen, it would collectively result in a carbon footprint reduction that is equal to half of Australias entire household emissions.
The firm calculated that the difference between putting Australias $3 trillion pool of super into a climate-friendly fund, versus one that was not, was equivalent to a lower carbon footprint of around 78 million tons of carbon (CO2e) per year, the same as 4.6 million average Australian households, or 16.9 million cars on the road.
Individuals who redirect these funds into climate-friendly companies could help to, collectively, drive governments and businesses to take action to set and beat the net-zero emissions targets needed to achieve strong and sustained reductions in emissions of carbon dioxide and other greenhouse gases, Mr McMurdo said.
And while ceasing to invest in carbon-intensive companies does not actually stop the emissions produced by those companies overnight, large-scale selling of shares in these companies sends a strong public signal and makes it far harder for them to raise new money.
The IPCC Report showed that Australia has already warmed 1.4 degrees since 1910 and that in every realistic scenario analysed, Australia will fail to meet the Paris agreement 1.5-degree warming target.
UN Secretary General Antonio Guterres said Mondays release of the Working Group I Report was a code red for humanity.
In an interview with the Sydney Morning Herald and The Age earlier this year, Mr McMurdo said the countrys move towards ethical investing had exploded since 2019, at first driven by climate-minded participants following the catastrophic summer bushfires 18 months ago, and then, of course, the coronavirus pandemic.
The Sydney-based fundie said while the virus initially savaged equity markets, it also prompted investors to rethink and seek out long-term, sustainable value in a way they hadnt before.
Australian Ethical lifted its funds under management above $6 billion in the June quarter with net inflows up 56 per cent to $1.03 billion for the full year. The companys ASX-listed shares were up 1.7 per cent at $8.50 by 2pm AEST.
Most of the bigger ethical ETFs were ahead on Tuesday, with BetaShares Global Sustainability Leaders and Australian Sustainability leaders funds each up 0.4 per cent. Vanguards Ethically Conscious International ETF was up 0.6 per cent to $74.22, and the VanEck MSCI International Sustainable Equity ETF rose 0.3 per cent to $29.70.
The VanEck MSCI Australian Sustainable Equity ETF was narrowly in front. Russells Australian Responsible Investment ETF was down 0.2 per cent.
