Our net zero goal refers to our financed scope 1 and 2 emissions*, that is, the emissions we finance through our investment and lending activities.
Our goal currently encompasses over 70% of our portfolio including listed equities, property, infrastructure, and a subset of our credit and private equity portfolio. These are the asset classes we are currently able to measure. As we become able to measure additional asset classes, they will then also be included in our net zero goal.
* Financed scope 1 and 2 emissions refers to the share of a company’s scope 1 and 2 emissions that can be attributed to Cbus’ investment and lending activities. Scope 1 emissions are direct emissions from activities that a company controls (e.g. using gas for heating, emissions from fleet vehicles). Scope 2 emissions are indirect emissions related to the electricity that a company purchases and uses. Emissions are created when the electricity is produced.
Our 2030 goal focuses on a connection to real world decarbonisation.
To track our progress against our 2030 goal, we use carbon intensity (tonnes of CO2 per $M invested) rather than ‘absolute’ carbon emissions because this allows us to account for growth in our portfolio over time.
The challenge with carbon intensity is that it constantly changes as investment markets fluctuate.
Given our commitment to transparency, and our desire to ensure we measure real world impact, we adjust for changes in asset values when we assess our progress each year to better connect to real world impact.
This goal replaces our initial goal of allocating 1% of funds under management (FUM) to climate-related investments.
Our initial goal was, in part, established to encourage investment and knowledge sharing across our portfolio. In 2023, we developed an internal framework to measure our exposure to climate change investments across the portfolio and identified that we had far exceeded our 1% goal.
This level of maturity in our exposure to climate change investments demonstrated that an evolution in our approach away from a standalone 1% allocation was warranted. The decision was made to absorb all investments within the 1% allocation back into their relevant asset classes, and to continue monitoring our exposure to climate change investments across the portfolio annually. As part of our Climate Action Plan, which is currently being developed, we will determine whether a portfolio-wide goal is appropriate.
Our climate change engagement has historically focused on the 20 Australian listed equity companies who contribute most to our financed emissions, with the aim of improving their responses to climate change.
From FY25 onwards, we will use an evolved materiality assessment to focus on a shorter and more impactful list of priority companies.
We aim to engage with these listed companies either directly or through participation with others. The aims of our engagement are unique to each company but typically seek improved governance practices, enhanced responses to climate change and appropriate disclosures.
We have historically used roadmaps that run for a two-year period to identify and track the specific actions we hope to achieve in this important area, over both the near and longer term. We are now looking to develop a new Climate Change Action Plan to succeed our third Climate Change Roadmap. This plan will capture short, medium and long term actions that we believe will support our climate change strategy.
Each year we disclose our climate change activities and the progress we have made towards meeting our climate goals under the Task Force for Climate-related Financial Disclosures in our Responsible Investment Supplement.
