OUR POSITION ON CLIMATE CHANGE
Climate change is one of the most significant long-term challenges facing society and the global economy. We accept the long-standing scientific research on human-induced climate change and support the aim of the Paris Agreement to limit global average temperature rise to well below 2°C.
Climate change presents risks for the enduring prosperity of our clients, communities and our business, which need to be managed. We monitor and assess climate risks and the potential impact on our business and have established a climate change action plan. This consists of: reducing our own environmental impact; investing responsibly; offering investment products that include climate focused exclusions; and reinforcing our governance and disclosure on climate change.
We collaborate with other investors as signatories to the UN supported Principles for Responsible Investment and through our membership of the Investor Group on Climate Change. For Perpetual, responsible investing means consideration of environmental, social and governance (ESG) factors is incorporated into our investment activities.
We are committed to transparent reporting and to aligning of our climate change disclosure with The Task Force on Climate-related Financial Disclosure (TCFD).
PERPETUAL FY20 SUSTAINABILITY REPORT HIGHLIGHTS ON CLIMATE CHANGE
Reducing our own environmental impact
Offering investment products that include climate-focused exclusions
Reinforcing our governance and disclosure on climate change
It is important we manage the impact of our own operations on climate change and the environment. The major contributors to carbon emissions in our operations are related to electricity consumption in our offices and the flights our people take for business travel.
During FY20, we estimate our Scope 1 and Scope 2 carbon emissions from electricity used to power our offices was 1,821 tonnes CO2e which is a 7% decrease compared to the previous year. The reduction was mainly due to having less people in our offices in Q4 FY20 while our people worked from home during COVID-19.
The pandemic also meant flights were cancelled towards the end of FY20. Employees took around 2,800 business-related flights in FY20, which is 32% less than the previous year. The carbon emissions associated with our business-related air travel also dropped to 577 tonnes CO2e in FY20, down 21% on FY19.
While COVID-19 has disrupted the way we do business, most of our people have felt productive and positive while working from home. Only 4% of our employees want to return to the office on a full-time basis in the long term. Like many organisations, we are exploring how we can create a workplace where our people deliver their best work, where and how they work best. This will have implications for our environmental impact as employees are likely to travel for work less; and for how we collaborate remotely using more digital technology such as Microsoft Teams.
We believe that if the investment management industry can help promote more sustainable economic growth this should translate into higher and more consistent investment returns. Our responsible investment policies set out how ESG factors, including climate-related issues, are incorporated into our investment process.
We also assess climate risk across our investment portfolios. We estimate our current total direct investment in companies earning significant revenue from producing fossil fuels is less than 4% of our total Funds under Management.
We are members of the Investor Group on Climate Change and support their aims that the risks and opportunities associated with climate change are incorporated into investment decisions for the ultimate benefit of individual investors.
We offer products to clients who wish to screen their investments based on ethical criteria including environmental considerations.
Our Wholesale Ethical SRI and Credit Funds exclude companies or issuers that derive a material proportion of their revenue from fossil fuel exploration and production. This year, we calculated the carbon footprint of our Wholesale Ethical SRI Fund.
Our recent acquisition of Trillium Asset Management (Trillium) will enable us to offer more ethically focused products. In August 2020, we launched two Trillium products in Australia: the Trillium ESG Global Equity Fund, which holds no material investments in fossil fuels, and the Trillium Global Sustainable Opportunities Fund that uses a thematic approach to identify companies addressing sustainability challenges and climate solutions.
We are committed to transparent reporting and continue to monitor developments relating to climate change disclosure, particularly The Task force on Climate-related Financial Disclosure (TCFD).
We have strong systems of corporate governance and risk management at Perpetual and ESG factors are embedded in the way we conduct business. ESG risks, including climate-related risks, are identified, assessed, managed and reported in accordance with our Risk Management Framework and Risk Appetite Statement with a focus on delivering shareholder value by making a positive impact to the communities in which we are operating, including the financial community through active industry participation.
ESG risks are also considered when assessing investments in our client-facing divisions.
We continue to disclose our carbon emissions data annually to the CDP (formerly Carbon Disclosure Project). We achieved a ‘D’ rating for our most recent submission, down from a ‘C’ the previous year, and will seek to improve our disclosure in future years. In 2021, we will conduct a review of our approach to sustainability at Perpetual and consider how we can continue to reduce our impact on climate change and the environment.
Case study 1
THE PERPETUAL IMPACT INVESTMENT FUND
The Perpetual Impact Investment Fund has made seven private equity investments to date in Australia, Chile, France, India, the US and the UK with a total value of just over $12 million via one of our investment management partners.
It allocates investments on behalf of the Perpetual Charitable Endowment Fund and aims to achieve a positive social or environmental impact.
So far, the Fund has invested in the health and wellness, financial empowerment, environmental and community development sectors. It endeavours to have a positive impact through projects to support more efficient use of renewable energy assets and packaging, large-scale ecological restoration, irrigation and ground water storage.
For example, funds were invested through investment manager, Hamilton Lane, in AeroSafe Global that develops and manufactures reusable packaging for use in temperature-sensitive shipping logistics including for the pharmaceutical and biomedical industries. Their reusable vacuum insulated packaging has decreased waste packaging that goes to landfill by around 10 million tonnes in 2019 compared with traditional single-use packaging.
Case study 2
ASSESSING OUR WHOLESALE ETHICAL SRI FUND’S CARBON FOOTPRINT
We conducted a carbon footprint assessment of our Wholesale Ethical SRI Fund this year to understand its contribution to climate change.
This revealed that the companies within the portfolio emitted 54,000 tonnes CO2e in FY20 based on the Fund’s ownership share.
The weighted average carbon intensity for our equity holdings in the Fund was 71 tonnes CO2e per million AUD sales.
This metric indicates a portfolio’s exposure to potential climate-related risks relative to other portfolios. It has less than half the weighted average carbon intensity of the S&P/ASX 300 Accumulation Index, a comparable benchmark.
Case study 3
NABERS TENANCY ENERGY RATING
In FY20 our Melbourne office in Rialto was independently assessed for the first time against the NABERS Tenancy Energy Rating, receiving an excellent five-star rating.
NABERS (which stands for the National Australian Built Environment Rating System) is rated up to six stars and measures a building’s environmental footprint such as its energy efficiency and carbon emissions.
Measures we have taken to improve our Melbourne office’s environmental performance include installing enhanced air conditioning systems, using more efficient video conferencing equipment and reducing the emissions intensity of our electricity supply. Our office performed more energy efficiently than 87.1% of tenancies rated in Victoria.
TRILLIUM FUNDS AVAILABLE IN AUSTRALIA
Two Trillium products with climate-focused exclusions are now available in Australia: the Trillium ESG Global Equity Fund, which holds no material investments in fossil fuels, and the Trillium Global Sustainable Opportunities Fund, a sustainability-themed strategy that invests in companies positioned to thrive as we transition to a more sustainable economy.