CBA taps wall of green money for $200m sustainability deposit

“In theory the sustainability linked loans that deposit is backing or financing, they are actually financing sustainable companies. And sustainable companies on the whole should be less risky over time, and therefore they should end up getting a lower cost of capital,” Mr Hinchliff said.

In another sign of the decarbonisation shift, the $43 billion fund State Super will on Monday vow to cut its carbon emissions intensity by 45 per cent by 2030, which it said reflected Paris climate change agreement targets.

State Super chief executive John Livanas said the decarbonisation trend would drive up the cost of capital for firms that did not address their carbon intensity. “Importantly, many of our members have actively engaged with us about their expectations for climate change risk to be effectively managed,” he said.

IFM is an investment giant that manages money for industry super funds, with a heavy focus on infrastructure assets.

IFM’s treasury services portfolio manager Helen Tu said its treasury area managed a cash portfolio of about $35 billion, which was invested in assets such as bonds or term deposits. Ms Tu said she hoped the bulk of that money could ultimately be invested in ESG-friendly assets, though the timeframe was uncertain.

“We think debt investors like ourselves have a role to play in supporting this transition to a low carbon economy and making assets more sustainable,” Ms Tu said.

Loading

Global financial firms were key private sector participants at the recent Glasgow climate summit, with companies holding $US130 trillion in assets pledging their support of net zero emissions. Mr Hinchliff re-reiterated his view that having a price on carbon was the most efficient way to allocate the capital needed to cut emissions in the long term.

“The financial system has a critical role to play in supporting Australia’s decarbonisation journey by directing capital to projects and assets that will drive our transition to a more sustainable future,” Mr Hinchliff said.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.