Our commitment to net zero carbon emissions across our investment portfolio by 2050

At Qantas Super, we believe that environmental, social and governance (ESG) factors can impact investment risks and returns, and contribute to our ability to deliver sustainable growth for the benefit of our members.

Our analysis shows that there is a risk to members of negative returns in both the short and long term if we do not act to mitigate climate risk. At the same time, this analysis also found there are potential opportunities to create value for our members if transitionary action is taken to make our investment portfolios more sustainable from a climate risk standpoint.

With this in mind, our sustainability objective is to be a responsible asset owner that aims to reduce carbon emissions from our investment assets, in order to achieve net zero carbon emissions by 2050.

Incorporating ESG factors into our investment strategy is not new to Qantas Super. After embedding sustainability as one of our core investment beliefs in 2015, we have enacted a range of measures, including:

• excluded manufacturers of cluster munitions and anti-personnel mine whole weapon systems from our portfolio in 2016
• joined the Australian Council of Superannuation Investors (ACSI), an organisation working with large investors to influence and engage with companies on ESG issues, in 2017
• excluded tobacco manufacturers from our portfolio in 2018
• started to assess the carbon footprint of our listed equities portfolio in 2019
• implemented our Impact Investing Framework in 2020, which will assist us in identifying and investing in assets that can generate a strong return, and a positive and measurable social and environmental impact

And now we’re taking the next step in our journey and committing to reaching net zero carbon emissions across our investment portfolio by 2050.

Reaching net zero carbon emissions means achieving a balance between carbon emissions produced and those taken out of the atmosphere.

In other words, it means any carbon emissions produced are offset by other measures to reduce emissions already in the atmosphere – for example, through the planting of trees in reforestation projects.

While the industry norm is to either focus only on listed equities, or shares, or take a product-driven approach, for example by creating a specific investment option focused on sustainability, Qantas Super will continue to take a whole-of-portfolio approach to embracing sustainability and achieving our goal of reaching net zero carbon emissions.

To do this, we will:

• conduct a complete, bottom-up mapping of our portfolio to determine our baseline
• revise our negative exclusion guidelines, and
• carefully manage the risks, costs, and opportunities that come with transitioning our portfolio to net zero carbon emissions

At the moment, our newest investment option Thrifty, which launched on 1 July 2021, is not part of this framework, but we intend to review whether it can be included while preserving its low cost approach, in July 2022.

It’s a long road to 2050, so we’ve broken our net zero goal into three phases.

In Phase 1, we aim to achieve a 24 percent reduction in carbon emissions from the 30 June 2020 baseline by 2025. In this time, we will:

• Research available low carbon benchmarks, and recommend a suitable benchmark to implement across our listed equities portfolio
• Establish principles for any new private market investments to balance return opportunities against carbon intensity
• Develop strategies and find opportunities to implement sustainability enhancements for our fixed interest and private market investments

We will keep you up to date with our progress.