Portfolio resilience and foot printing
Portfolio resilience and foot printing
VicSuper invests in thousands of companies, across the global economy. So we need to understand and manage our portfolio climate risks.
In late 2016 we appointed Mercer to undertake a portfolio climate risk assessment across different climate scenarios and time horizons out to 2050. This analysis identified that climate change does pose a risk to returns for us, as it does for many of our peers in the superannuation and investments sector. But importantly, Mercer’s research found that VicSuper is well placed to manage this risk thoughtfully and progressively over the medium and long term.
Each year VicSuper measures the greenhouse gas emission intensity of our equities portfolio. A carbon intensity measure allows us to compare the greenhouse gas intensity of our portfolio year-on-year, despite our funds under management increasing over time. This also helps us understand where carbon risks and opportunities sit within the portfolio and fulfils our Montreal Pledge obligations. By signing the Pledge we have formally committed to measuring and publicly disclosing the carbon footprint of our portfolios on an annual basis.
At the end of May 2017, our equities investments included in the carbon footprint analysis represented approximately A$8.6 billion and approximately 46% of our entire portfolio.
1 In 2017 the carbon intensity of the measured equity portfolio was 251.6 tonnes of CO2e/A$M. This is 10% lower than the intensity reported last year (279.6 CO2e/A$M in 2016) and below the portfolio benchmark. Since 2008, when we began measuring our carbon footprint, the intensity of the equities portfolio has decreased by approximately 30%.
*In 2016 the benchmark was changed from the MSCI All Country World Index to a custom benchmark which more closely mirrors the allocation to international, Australian and emerging market investments in VicSuper’s equity portfolio.
What do the trends mean?
We aim to reduce the carbon intensity of the portfolio without negatively impacting risk adjusted investment performance.
2 Our strategy of integrating Environmental, Social and Governance factors into our investment process helps us to manage carbon risks. We also actively engage with many of the companies we invest in to help them improve how they manage carbon risk and the transition to a low carbon economy.
How is our carbon intensity calculated?
VicSuper engages the UK-based, research company Trucost to measure the carbon footprint and intensity of VicSuper Fund's listed equities. Trucost estimates carbon efficiency and quantifies carbon risk based on data publicly disclosed by the companies in our portfolio.
Operational carbon foot printing
VicSuper has been managing and reporting operational greenhouse gas emissions since 2006 and we have a number of initiatives in place that contribute to reducing our emissions. Our Melbourne head office has been awarded 6 Star Green Star and 5 Star NABERS Energy ratings. These ratings mean that our offices have been designed to reduce energy consumption by 50% when compared to a typical Melbourne office building. In addition to generating positive environmental outcomes, these efficiencies also contribute to operational cost savings. The head office also has a 4 star NABERS (base building) waste rating, a first in Australia.
In 2016/17 our operations were responsible for approximately 860 tonnes of carbon dioxide equivalent emissions (CO2e). This is an increase on our prior year emissions, primarily due to the expansion of our head office floor area. We still maintain a relatively small emissions footprint for a business of our size.
In 2016/17 VicSuper’s emissions intensity was 3.23 tonnes CO2e per employee. Over the last five years our emissions intensity has decreased by over 40%.
After minimising our emissions, we purchase carbon offsets through Climate Friendly to account for and neutralise our remaining Scope 1, 2 and 3 emissions. Our purchased carbon offsets provide support for a number of emissions reduction projects around the world.
Learn more about the wind power projects VicSuper is currently supporting in
Turkey (PDF) and
India (PDF).
VicSuper invests in thousands of companies, across the global economy. So we need to understand and manage our portfolio climate risks.
In late 2016 we appointed Mercer to undertake a portfolio climate risk assessment across different climate scenarios and time horizons out to 2050. This analysis identified that climate change does pose a risk to returns for us, as it does for many of our peers in the superannuation and investments sector. But importantly, Mercer’s research found that VicSuper is well placed to manage this risk thoughtfully and progressively over the medium and long term.
Each year VicSuper measures the greenhouse gas emission intensity of our equities portfolio. A carbon intensity measure allows us to compare the greenhouse gas intensity of our portfolio year-on-year, despite our funds under management increasing over time. This also helps us understand where carbon risks and opportunities sit within the portfolio and fulfils our Montreal Pledge obligations. By signing the Pledge we have formally committed to measuring and publicly disclosing the carbon footprint of our portfolios on an annual basis.
At the end of May 2017, our equities investments included in the carbon footprint analysis represented approximately A$8.6 billion and approximately 46% of our entire portfolio.
1 In 2017 the carbon intensity of the measured equity portfolio was 251.6 tonnes of CO2e/A$M. This is 10% lower than the intensity reported last year (279.6 CO2e/A$M in 2016) and below the portfolio benchmark. Since 2008, when we began measuring our carbon footprint, the intensity of the equities portfolio has decreased by approximately 30%.
What do the trends mean?
We aim to reduce the carbon intensity of the portfolio without negatively impacting risk adjusted investment performance.
2 Our strategy of integrating Environmental, Social and Governance factors into our investment process helps us to manage carbon risks. We also actively engage with many of the companies we invest in to help them improve how they manage carbon risk and the transition to a low carbon economy.
How is our carbon intensity calculated?
VicSuper engages the UK-based, research company Trucost to measure the carbon footprint and intensity of VicSuper Fund's listed equities. Trucost estimates carbon efficiency and quantifies carbon risk based on data publicly disclosed by the companies in our portfolio.
Operational carbon foot printing
VicSuper has been managing and reporting operational greenhouse gas emissions since 2006 and we have a number of initiatives in place that contribute to reducing our emissions. Our Melbourne head office has been awarded 6 Star Green Star and 5 Star NABERS Energy ratings. These ratings mean that our offices have been designed to reduce energy consumption by 50% when compared to a typical Melbourne office building. In addition to generating positive environmental outcomes, these efficiencies also contribute to operational cost savings. The head office also has a 4 star NABERS (base building) waste rating, a first in Australia.
In 2016/17 our operations were responsible for approximately 860 tonnes of carbon dioxide equivalent emissions (CO2e). This is an increase on our prior year emissions, primarily due to the expansion of our head office floor area. We still maintain a relatively small emissions footprint for a business of our size.
In 2016/17 VicSuper’s emissions intensity was 3.23 tonnes CO2e per employee. Over the last five years our emissions intensity has decreased by over 40%.
After minimising our emissions, we purchase carbon offsets through Climate Friendly to account for and neutralise our remaining Scope 1, 2 and 3 emissions. Our purchased carbon offsets provide support for a number of emissions reduction projects around the world.
Learn more about the wind power projects VicSuper is currently supporting in
Turkey (PDF) and
India (PDF).