Super funds in dark when it comes to costs of climate change

A survey of 31 funds, each managing about $1 billion, found that 85per cent planned to improve their ability to assess the financial risks of climate change by hiring expert staff or through training.

However, only 9 per cent had attempted to measure their exposure to the phenomenon.

John Connor of the Climate Institute, which conducted the survey, said Australia's trillion-dollar superannuation industry needed better tools to assess properly its risk to climate change.

"It's a bit like the subprime problem," he said. "What we've got here is a whole bunch of unpriced, very poorly regulated or unmanaged risk. It's a 'sub-clime' problem."

Mr Connor said buckling train tracks during Melbourne's heatwave in January, and the Black Saturday bushfires, were examples of how climate change was already costing us.

The survey found that 95 per cent of funds had altered or planned to alter mandates for investment managers to reflect climate change issues. But 78 per cent did not know how much their environmentally friendly, "low-carbon" assets were worth. And 70 per cent did not have a method for calculating their carbon costs if schemes such as the Federal Government's proposed emissions trading scheme were introduced.

The US said last week it would consider imposing "green tariffs" on countries that failed to introduce tough carbon cost schemes. Climate Change Minister Penny Wong admitted such "green protectionism" could be costly for Australian businesses.

Meanwhile, the Business Council of Australia said companies were deferring energy-efficient investments because of uncertainty about national climate change policy.

Fiona Reynolds, of the Australian Institute of Superannuation Trustees, said the Climate Institute's survey showed policy ambiguity was a major problem. "Many funds are waiting in anticipation for regulatory certainty on the design of a carbon pollution reduction scheme," Ms Reynolds said.

AIST and the privately funded Climate Institute are developing best-practice guidelines, available within two months, to help asset consultants and investment managers.

Mr Connor said the guidelines would also give business greater confidence in investing in low-carbon emitting assets, such as six-star commercial buildings and renewable energy companies.