Sydney-based NGS Super, with A$14 billion ($9.6 billion) in assets, has made "faster-than-expected progress" toward its target of having a carbon-neutral portfolio by 2030, the fund said in a statement on July 27.
Carbon intensity in its Diversified MySuper portfolio was reduced by nearly 20% by June 30, 2022, from the year prior — 13% ahead of its projected trajectory to achieve carbon neutrality.
In 2021, the fund set a goal of achieving a carbon-neutral portfolio by 2030, along with an interim target of reducing emissions in its portfolio by 35% by 2025.
The carbon-neutral goal includes all reported greenhouse gas emissions measured in CO2 equivalents, Chief Investment Officer Ben Squires said in an emailed response. "We rely on the information reported by the companies in which we invest to determine these measures," he added.
The fund's strategy to reach its goal includes engaging with portfolio companies, divesting from certain carbon-intensive companies and industries, investing in low-emission technologies and infrastructure, and researching allocation to carbon-positive investments, the statement wrote.
On the engagement front, NGS Super works with its managers by discussing and providing them with engagement priorities, Mr. Squires said.
"A recent example of engagement by our manager is with Downer," he said.
Downer EDI owns and operates a variety of services and projects such as railways, bus operators, transport infrastructure, utilities and facilities services. In March, Downer came under investigation by the New South Wales Independent Commission Against Corruption for allegedly having some of its employees favor certain subcontractors for projects with the NSW transport agency in exchange for benefits.
"This engagement with the company saw the chairman resign, one other director announce his resignation (effective on or before Sept. 30) and the CFO depart. These were three conditions which our manager laid down and which were necessary in order to instill a culture of accountability," Mr. Squires said.
NGS Super also divested A$191 million from carbon-intensive companies and industries such as oil and gas production firms Woodside Energy and Santos.
The fund also plans to invest in firms involved in isolating carbon, such as carbon capture utilization and storage solutions, as well as natural capital assets such as sustainable forestry.
NGS Super believes that these opportunities are best found in private equity and infrastructure funds involved in these areas.
In response to how NGS Super ensures its carbon emissions measurements are sound, particularly as the Australian regulators have recently cracked down on greenwashing in the industry, Mr. Squires said that the fund reviews all publications and disclosures to ensure they are consistent with their activities.
It also engaged KPMG to review its disclosure documents and publications, which will be completed in October.
"We only publicly disclose those activities that have been quantified and validated and reported to the board," Mr. Squires added.
