Opportunity
As part of its remit to support the responsible investment activities of its signatories, the United Nations Principles for Responsible Investment (UN PRI) coordinates its collaborative investor engagements to advance action on ESG issues.
The UN PRI's collaborative sovereign engagement on climate change is a pilot initiative to support and encourage governments to take action on climate change. Australia was selected as the pilot sovereign.
QIC has been selected as a participant in the pilot, joining a group of 24 other investors from around the world working to encourage climate policy action in Australia as a means of addressing the impacts of climate-related risks on the Australian economy.
Approach
The collaborative sovereign engagement recognises the risks of climate transition on the value of sovereign debt investments, and the important role of sovereigns (the issuers of government debt) in contributing to the reduction of climate risk and therefore the risks to investor portfolios more broadly.
More specifically, the collaboration will seek that sovereigns:
- Close the gap between current action and a Paris-aligned emissions reduction pathway
- Establish detailed, credible and economy-wide net zero transition plans supported by policy and investment
- Enhance climate adaptation and resilience across the economy and community
- Improve disclosure of sovereign exposure to climate risks and opportunities consistent with international standards.
Collaboration aims
QIC's engagement efforts will be focused on the national regulators and authorities stream of the collaboration. Given the relative newness of collaborative engagement in this area, we have the opportunity to contribute to the broader body of knowledge of investor practice and the important role sovereigns play in reducing climate risk.
There is no guarantee that any of the steps taken by QIC and/or third parties to mitigate, prevent or otherwise address material ESG topics will be successful, completed as expected or at all, or will apply to or continue to be implemented in the future.