#Delivering Responsible Banking & Insurance
To support implementation of the Responsible Banking and Insurance Policy in Australia, we are developing a range of Standards to respond to environmental and social risks in our business. These Standards will help to ensure consistent decision making across our investment, banking and insurance portfolios on issues including thermal coal, tobacco and controversial weapons.
#Ensuring a Responsible Value Chain
Suncorp’s Responsible Investment Policy incorporates environmental, social and governance considerations into investment manager selection and the evaluation of investment risks and opportunities. The Policy outlines our criteria for investments, our approach to impact investing and the governance of proxy voting activity. Our investment managers apply a shadow carbon price to their analysis of investment opportunities, to manage the risk of stranded assets as we transition to a net-zero emissions economy.
Suncorp also ensures strong governance of procurement activities and is managing the environmental and social risks and opportunities in our supply chain. Our Corporate Responsibility Principles are embedded in our Procurement Policy and Supplier Code of Practice for our Australian operations.
In 2019 Suncorp became a signatory to the United Nations Principles for Responsible Investment, an international network of institutional investors that works to understand the implications of environmental, social and governance factors.
Following amendments to external investment manager mandates last year, Suncorp divested from tobacco and controversial weapons (land mines, cluster munitions, biological and chemical weapons). We also worked with our investment managers to exclude a small number of companies with identified human rights abuses in their operations or supply chains. In 2019 our list of exclusions was extended to cover recreational cannabis.
During the year Suncorp actively participated in a global working group with the Science Based Targets Initiative to develop standards for the reporting of Scope 3 carbon emissions in the financial sector.
We were also involved in a global pilot to measure the alignment of our equity and credit portfolios with a less-than-2-degree Celsius transition scenario. We aim to use this analysis to further minimise our exposure to stranded asset risk and those highly impacted by the transition to a net-zero emissions economy. Overall, Suncorp’s equity portfolios are less carbon intensive than the benchmark.
The transition to a net-zero emissions economy offers increased opportunity for low-carbon investment. During 2018–19 Suncorp’s low-carbon investments increased to $310 million. This includes an additional $128 million allocation to green bonds and a $15 million commitment to renewable energy infrastructure investment.
Proxy voting governance and activity
In 2018 Suncorp completed a review of its proxy voting arrangements to ensure all proxies were voted in a manner consistent with Suncorp’s Responsible Investment Policy and Corporate Responsibility Principles. A more formal governance structure for proxy voting decisions was implemented and a set of Proxy Voting Principles was developed to guide voting decisions. In 2018–19 Suncorp voted at 366 meetings on 3,001 resolutions in 27 countries.
#Fossil fuels guideline
Suncorp is committed to align our business to the Paris agreement.
Climate change will have a systemic impact across sectors and geographies, presenting a wide range of financial and strategic risks and opportunities for our business, communities, and the wider economy. Assessing these risks, and supporting a just transition to a net-zero carbon emissions economy by 2050, will require a careful and considered approach.
Through our Climate Change Action Plan, Responsible Investment Policy, and Responsible Banking & Insurance Policy, we ensure our business practices are aligned with the 2015 Paris Agreement and factor in economic and policy change occurring as a result of the transition to a net-zero carbon emissions economy by 2050. This includes the application of a shadow carbon price in the assessment and management of our investment exposures.
Suncorp does not finance fossil fuel projects as it does not have an institutional bank. Fossil fuel activities make up less than 0.5% of our insurance business, 0.5% of our insurance and shareholder investment assets, and a negligible proportion of our commercial lending portfolio (as at 1 July 2019).
Suncorp will not directly invest in, finance or underwrite new thermal coal mining extraction projects, or new thermal coal electricity generation. Suncorp will phase out of its exposures by 2025.
Suncorp will phase out of existing underwriting of, and direct investment in, thermal coal by 2025. This includes mining companies principally involved in the extraction of thermal coal, as well as electricity generation companies whose business is clearly inconsistent with the transition to a net-zero emissions economy by 2050.
Suncorp will continue to provide transactional banking and insurance to personal and small-to-medium businesses, and statutory or compulsory insurance such as workers’ compensation and compulsory third-party insurance.
Suncorp will continue to underwrite, lend to and invest in companies whose business is clearly consistent with the transition to a net-zero carbon emissions economy by 2050.
Suncorp recognises many companies are working constructively to be part of the transition to a net-zero carbon emissions economy. This includes electricity companies which are committed to transition away from coal-fired electricity generation and are materially investing in renewable and low-carbon energy generation and infrastructure.
Suncorp will seek to increase exposure to businesses that have a positive environmental impact, including renewable energy generation and technology.
The transition to a net-zero emissions economy also offers commercial opportunities to grow our business while at the same time supporting environmental objectives.
Suncorp will review this approach annually.
This includes annual review of exposures, current and potential economic and policy change, and the application of a shadow carbon price.