Australia: Investor Group On Climate Change Releases $5 Trillion State Of Net Zero Investment Report 2024

The Investor Group on Climate Change (IGCC) has published its State of Net Zero Investment Report for 2024, the industry’s most comprehensive and rigorous analysis of institutional investors' net zero investment practices in Australia.

The report highlights the progress and challenges faced by Australian investors in addressing climate change.

It is based on survey responses collected in September 2023 from 63 firms managing AU$5 trillion on behalf of Australian beneficiaries.

Key findings:

• Australian investors remain committed to climate action despite global and local headwinds.
• Investors are increasingly measuring financed emissions, even in traditionally challenging asset classes.
• Investors’ readiness for mandatory climate disclosures is mixed:
  • Only 32% of respondents said they were analysing the physical climate risk in their portfolios under plausible temperature-rise scenarios. This kind of “scenario analysis” is highly likely to become mandatory under the new legislation.
  • 62% of respondents said they were producing TCFD-aligned reporting (up from 53% in 2022), although only 17% were getting external review or assurance.

The Investor Group on Climate Change is running an in-depth masterclass for members on scenario analysis, to help investors prepare for Australia’s forthcoming mandatory disclosure regime.

The report suggests focus areas for progress in capital markets:

• More investors setting whole-of-portfolio interim targets will increase stakeholders' confidence in reaching long-term net zero commitments.
• Increasing action is needed on adaptation and resilience to safeguard the value of investments, including;
  
  1. Investors analysing, and acting on, physical risk in each asset class,
  2. Improving Australia's policy environment, including the National Adaptation Plan, to drive local investment in climate solutions.
• Continuing improvement in the policy environment to stimulate private capital investment in climate solutions, which will reduce capital flight risk.
• Enhancing corporate engagement and stewardship practices, including setting engagement targets, to accelerate industry emission reduction efforts.
• Promoting engagement and collaboration between asset owners and asset managers to improve climate-related outcomes.

© Scoop Media