Large foreign investment funds have warned they could blacklist Australia and cut billions of dollars of investments in the country if the Morrison Government fails to join the rest of the world in committing to a net-zero 2050 greenhouse gas emissions target

 

Financial Review, 5 July 2021:

Large foreign investment funds have warned they could blacklist Australia and cut billions of dollars of investments in the country if the federal government fails to join the rest of the world in committing to a net-zero 2050 greenhouse gas emissions target.

The warning backs up concerns of the Reserve Bank of Australia that the economy is at risk from foreign investors withdrawing capital because of perceptions among global fund managers that the Morrison government is resisting strong action on climate change.

The $US1.4 trillion ($1.9 trillion) investment management firm, Invesco, said Australia’s climate change policies were an important consideration for its investments under its environmental, social and corporate governance (ESG) rules.

Invesco’s UK-based Asian equities director, John Pellegry, told The Australian Financial Review that “among developed markets, Australia’s approach appears to be behind others”.

“This may impact our investments in the future if other parts of the investment universe are tackling the issues more effectively.

“An inadequate climate change policy could lead to the selling of Australian investments – for example if required by our clients or if necessary to adhere to stricter policies outside Australia – for example, EU [European Union] policies.

“A greater valuation discount would also be warranted for the additional risk of investing in companies with less growth prospects and subject to greater externality costs – such as carbon pricing – if behind the curve versus global competitors…...