The Australian Unity Green Bond Fund, announced today, will invest in a combination of green, social and sustainable fixed interest securities with the primary purpose of helping to lower carbon emissions.
The fund is available to wholesale investors and is managed by Australian Unity's in-house cash and fixed interest team, Altius Asset Management.
"This initiative continues the expansion of Australian Unity's responsible investment capability following increasing demand from our customers and members," Australia Unity investments executive general manager Geraldine Barlow said.
"Australian Unity has an important role to play in developing and expanding the range of responsible investments available to Australian investors."
Atlius chief investment officer Bill Bovington said shareholders' demand for green investments had intensified following the Black Summer bushfires.
"We believe there is a growing interest in what is already a sizeable market," he said.
"A number of large Australian super funds, implemented asset consultants and general insurers have all expressed interest in a green debt market."
Late last month, Hesta superfund said it would throw its A$52 billion weight behind reducing carbon emissions in its investment portfolio by 33% by 2030 to reach net-zero by 2050, in line with the Paris Agreement.
The fund's Climate Change Transition Plan will introduce carbon reduction targets across its investment portfolio, focussing on low-carbon technologies, and address medium-term transition risks and opportunities.
"Climate change presents a financial risk to the Hesta investment portfolio and the world in which our members will retire," Hesta CEO Debby Blakey said.
"An urgent response is required and the actions within the Climate Change Transition Plan have been thoughtfully and carefully designed to provide an effective and tangible response."
In February, fellow superfund UniSuper came under considerable pressure from its members and shareholder activist group Market Forces to divest its investment portfolio from fossil fuels.
"UniSuper is responsible for the retirement savings of Australia's leading scientists, academics and researchers, yet it is directly undermining our work and our future by driving climate change through its continued funding of fossil fuels," ANU research fellow Dr Florian Busch said.
UniSuper has disclosed that at least 12% of its exposure is in companies involved in fossil fuels including Woodside, Santos and pipeliner APA Group which Market Forces estimates to equate to around A$10 billion.
"There is strong demand for responsible investment products among Australian investors," CEFC CEO Ian Learmonth said today.
"We are at the cusp of a long-term trend toward sustainable finance and market leaders such as Australian Unity will be a key part of this transition."
Wood Mackenzie chief analyst Simon Flowers wrote last month that the collapse in oil and gas prices and extreme price volatility is also starting to change investor perceptions around relative risk between investing in oil and gas and new energy.
"Pre-FID upstream projects that worked at US$60/bbl don't look so clever at US$35/bbl," he said.
"Risk-adjusted, the more modest returns typical from renewables projects can stack up pretty well."
