Climate change

Climate change creates both risks and opportunities that we need to assess and understand to achieve the best financial outcomes for our members. We also need to consider how the balance of risks and opportunities may change depending on how the world responds to climate change, and how successful we are at limiting global warming.

We believe that a fair and fast transition to a low carbon economy will generate the best opportunities for our members, through supporting risk-adjusted investment returns, the creation of new jobs, and helping to reduce pressure on the cost of living. Achieving this will require participation of governments, business, investors and industry, and a focus on coordination and real emissions reduction.

Carbon reduction goals

Our portfolio carbon reduction goals cover our Scope 1 and 2 financed emissions^*; that is, our share of the operational emissions of companies and assets that we finance through our investment and lending activities. At this stage we include those asset classes we are able to measure; listed equities, property and infrastructure (~72% of our portfolio).

Our 2030 goal is an interim goal on our path towards net zero portfolio emissions by 2050. As we track this interim goal, we face the issue of tracking emission reductions as our funds under management (FUM) increases.

For this reason, we track our 2030 goal using ‘carbon intensity’ rather than ‘absolute’ carbon emissions. This allows us to account for growth in our portfolio over time.

We also believe carbon intensity should be adjusted to account for factors that don’t relate to emissions reduction (e.g. asset valuations). We are currently investigating ways to enhance our approach to measuring carbon emissions.

Climate change investments

We measure our exposure to climate change investments annually.

Climate change engagement

We use a materiality assessment to determine the companies we will engage on climate change, either directly or through participation with others. The aims of our engagement are unique to each company but typically seek improved governance practices, enhanced responses to climate risk and appropriate disclosures.

^* Scope 1 emissions are direct emissions from activities that a company controls (e.g. using gas for heating, emissions from fleet vehicles). Scope 2 emissions are indirect emissions related to the electricity that a company purchases and uses. Emissions are created when the electricity is produced.

Climate strategy

We have developed an initial internal climate strategy to replace our roadmap that closed in 2024. This initial strategy focuses on preparing Cbus for mandatory climate-related disclosures (AASB S2).¹

In parallel, we will review our climate ambition and implementation plans to ensure that they remain appropriate, feasible and underpinned by credible assumptions.

¹ AASB S2 is the Australian Sustainability Reporting Standard, Climate-related Disclosures.