The $54 billion construction industry fund is planning to cut 45% of absolute portfolio emissions by 2030 and is aiming for net zero emissions by 2050 by removing high-risk climate holdings.
Under Cbus' new Climate Change Roadmap, the fund will develop a stranded assets framework to reduce the risk for its members and ensuring a secure retirement.
It comes as Cbus has become the first Australian financial institution to join the United Nations Convened Net Zero Asset Owners Alliance.
The fund said by identifying the carbon emissions of companies and assets it holds, it will be able to reduce emissions in the real economy and avoid assets that will inevitably become stranded.
|Sponsored by Jamieson Coote Bonds|
8 reasons to hold high grade bonds today
Cbus chief investment officer Kristian Fok said the economies of 2030 and 2050 will look very different to what we have experienced over the last few decades and high-risk climate holdings will not see out their traditional economic life.
"The average Cbus member is 39 years old. It's our responsibility to safeguard their investments as the financial impacts and physical effects of climate change intensify," he said.
"This science has made clear the targets and timeframes. The course that we have charted will see Cbus reduce our portfolio emissions while investing further in renewable energy and climate solutions, as well as avoiding 'stranded assets' as the economy transitions."
The fund has already undertaken work to understand companies that are at risk of being stranded and consistently ranks highly in the international Global Real Estate Sustainability Benchmark.
The roadmap will develop pathways to achieve portfolio targets for each asset class including equities.
"Portfolio-wide targets give us more flexibility as to how we allocate our members' money. This next two-year road map will see climate pathways developed across sectors and asset classes, acknowledging the economy will decarbonise at different rates. This approach also provides consistency with what we ask of companies and assets in which we invest," Fok said.
The Cbus Climate Position Statement and roadmap will be reviewed next in 2022.