The Sustainability Report moderated this live panel debate examining the legal and governance issues behind fossil fuel divestment. A superannuation fund’s decision around divestment from fossil fuel or high carbon emission intensity assets should be grounded in the fund’s governance processes towards investment issues and is bounded by legal and regulatory standards for fund trustees.
Regulations and legislation are changing the way companies and asset owners report on carbon emissions and exposures to future carbon emission liabilities, and more than 30 countries have a price on carbon emission. There are also better, more sophisticated tools to analyse fossil fuel risks and carbon emissions intensity, which contribute to more sophisticated decision-making.
As a result of those factors, institutional investors have a duty to evaluate the potential risk to investments brought by fossil fuels and carbon emissions intensity, and to make decisions relative to their portfolio, their governance structure and their legal responsibilities, panelists told the standing-room crowd in Sydney in October.
The panel evaluated legal obligations and governance approaches as well as the growing body of research in this area. Brian Scott, CEO, Amundi Asset Management pointed to a report co-authored by pension fund AP4 and Amundi, Hedging Climate Risk, as one example.
The panel was sponsored by MSCI and Amundi Asset Management Australia. Moderated by Rachel Alembakis, publisher of The Sustainability Report, the panel featured Brian Scott, CEO, Amundi Asset Management Australia; Maged Girgis, Partner, superannuation, Minter Ellison, Alexis Cheang, principal, senior responsible investment consultant, Mercer, Michael Salvatico, vice president, MSCI ESG Research.