How UniSuper, Cbus and Future Fund manage property climate risks

AsianInvestor

Rapidly rising appetite for Australian property among regional and international asset owners could leave the institutions exposed to billions of dollars of lost investment value. However, asset owners such as UniSuper, Future Fund, Cbus, Lendlease and fund managers argue that it’s possible to protect returns by combining active investing and pricing in climate risks. The rising dangers of a warming world are increasingly on the mind of Australian CIOs. On January 11 UniSuper chief investment officer John Pearce took an underweight position in the insurance sector, citing concerns over climate change having implications over insurers’ returns.

The country’s property sector looks particularly vulnerable. A 2019 report by the Climate Council in Australia said local real estate could lose A$571 billion ($436.31 billion) in value by 2030 due to climate change and extreme weather. Climate risks could also cost owners 1% or more of the property’s value per annum.  Despite these risks, local and international asset owners are keen to invest into more Australian property.

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