A top investment manager is warning Australia risks being excluded from future trade deals unless the Prime Minister commits to a target of net zero emissions by 2050.
John Pearce, chief investment officer of the $100 billion UniSuper superannuation fund, said Australia's international reputation would continue to be damaged unless there was faster action to decarbonise the economy and phase out dirty fossil fuel assets.
"At the moment, it's just reputation," Mr Pearce told the ABC's AM program.
"At a time when we're seeing relationships with China in particular at quite a low ebb, the last thing Australia can afford is to compromise any relationships we have with our other trading partners.
"So it's more urgent than ever to get to a net zero target without one hand tied behind our back."
One of Australia's most respected fund managers, Mr Pearce said corporate Australia was moving rapidly to decarbonise despite the lack of a 2050 commitment from the federal government.
"Corporate Australia and indeed corporates around most of developed world are just getting on with it," he observed.
"We hear a lot about Australia as a country not coming to net zero by 2050. My colleagues and I are going to be a little bit embarrassed if the Prime Minister fronts up at the end of the year and we still haven't made that commitment."
The next international climate talks, COP 26, will take place in Glasgow for a fortnight starting on October 31.
UniSuper halves fossil fuel exposure
UniSuper's latest Climate Risk Report, released today, underscores progress in decarbonisation, with 40 of 50 companies in the fund's portfolio setting Paris Agreement-aligned climate targets.
The report says 0.4 per cent of the UniSuper portfolio is exposed to fossil fuel extraction, with overall fossil fuel exposure down to 2.5 per cent from 5 per cent last year.
Mr Pearce's warning came just after resources giant BHP announced plans to sideline its oil and gas assets in a merger with Woodside Energy to create a $41 billion goliath.
But Mr Pearce questioned commentary from BHP chief executive Mike Henry that the proposed deal was not motivated by climate concerns or investor pressure to exit fossil fuels.
"BHP has pointed out that they're not doing this deal with Woodside in reaction to activists. That may be true," Mr Pearce said.
"The question is — would they have done this without the pressure that they're under?
Despite UniSuper's move to decarbonise its investments, Mr Pearce said simply divesting was not necessarily the answer, arguing funds could influence companies by owning stakes in them.
