Navigating the unknown for a superannuation fund in climate-related transition planning

If the guidelines are still in development, how do you create a detailed transition plan now?

A leading superannuation fund needed to develop a climate transition plan in response to the Australian Accounting Standards Board’s (AASB) climate-related financial disclosure requirements. But our client was concerned that Australia had no precedents. Prescriptive guidance around the disclosure framework had yet to be provided. Market intelligence suggested details would only arrive after a first iteration of the plan needed to be in place. 

Our client enlisted our help because of Baringa's pivotal role in helping to draft the UK's Transition Plan Taskforce (TPT) climate guidance. These guidelines are recognised globally as the gold standard, offering actionable and robust guidance. Given IFRS had since adopted the TPT disclosure framework, our team had a strong idea of the direction of travel for the Australian regulations. We were brought on board to help the fund make informed and strategic choices as it developed its transition plan.

Linking climate to financial drivers

At the heart of a transition roadmap are clear climate ambitions. The fund had yet to set any formal climate ambitions. Our goal was to help our client create climate targets that didn’t just align with future regulatory, investor and market expectations – but also supported business strategy.

We started by linking climate to the underlying financial drivers that inform the fund’s 2030 strategy. Once leadership saw how certain climate risks and opportunities would affect net inflows and outflows, it was much easier for climate to be integrated into strategy. The transition plan was couched in the language of the business. And the Sustainability team had an imperative to engage with each part of the business whose key performance indicators (KPIs) are impacted by climate.  

Making your transition plan, a business plan.

The fund now has a climate transition plan that meets AASB disclosure expectations and integrates climate risk and opportunity management across the business. Climate has become a key consideration that feeds into how the fund’s 2030 strategic targets will be achieved. 

The business has identified, assessed and integrated physical and transition risks into enterprise risk management. It is continuing to develop a comprehensive strategy for decarbonising operations and a governance framework to oversee transition implementation and reporting. Most importantly, the organisation understands that the transition plan will help the fund to become financially resilient to climate change, ensuring its long-term sustainability.

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