Some of Australia’s biggest superannuation funds and investment consultants have been urged by Treasurer Jim Chalmers to sink more of their members’ cash into environmentally sustainable energy projects.
At a meeting of a dozen funds and consultants who control more than $20 trillion in assets on Wednesday, Chalmers said investing in sustainable finance was not a “left-wing fringe idea” but one that offered the chance to upgrade the nation’s industrial base.
Chalmers this week published a 6000-word essay in magazine, in which he argued for a new “values-based approach” to capitalism.
He revealed that this year the government would create “new sustainable finance architecture” that would include descriptions of the climate impact of different types of investments. The Treasurer also signalled the government would expand the role of investment in social purposes, such as aged care or disability, arguing the market does not exist to support ongoing investor activity.
But former treasurer Peter Costello, current head of the Future Fund, said on Wednesday he was sceptical of governments asking businesses to put more emphasis on pursuing social goals.
The meeting Chalmers addressed on Wednesday was organised by the Australian arm of the UN’s Principles for Responsible Investment initiative. Businesses with more than $120 trillion of assets work under the scheme, which aims to support investors that operate under environmental, social and governance guidelines.
Among those present were Responsible Investment Association Australasia, JANA, ACSI, AustralianSuper, CBUS and IFM Investors.
Chalmers said companies at the meeting understood that social and environmental objectives could align with financial and economic ones.
“This is not some left-wing fringe idea. It’s about better-designed and better-informed markets and more co-operation between investors and governments to modernise our economy and deepen and broaden our industrial base, powered by cleaner and cheaper energy,” he said.
“Our government wants to provide the vision, policy stability and guardrails that investors have been crying out for, for years.
“It’s exactly why we’re getting on with delivering a forward-looking, internationally aligned, sustainable finance agenda born out of economic opportunity and contemporary necessity, not some sort of outdated ideology that a minority still clings to.”
Costello on Wednesday argued the Future Fund and super funds should focus on making returns rather than pursuing social goals, which governments could target through direct spending in the budget or legislation.
“Governments are there to decide on social objectives. Businesses don’t do that. Business is there to run businesses and account to shareholders,” he said in response to a journalist’s question about Chalmers’ essay.
“This idea that every institution must be given every purpose – I think you’ll just lose focus.
“The government can through law require businesses to do whatever it wants. And I think that’s the way to do it, to do it via law.
“Everybody knows what the rules are, they can abide by them,” added Costello, who is also chairman of this masthead’s owner, Nine Entertainment Co.
He stressed that neither Labor nor the Coalition had attempted to tell the Future Fund what to invest in, and said if this were to occur it would “come to a very bad end”.
“This is an investment fund, we invest for return. That’s what we’re here for. I would say that’s the same when it comes to superannuation. Superannuation funds invest for return because that’s people’s retirement.”
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