in social and low carbon investments
of total assets under management (AUM) covered by Responsible Investment Policy
Committed to Synergis Fund for social impact through specialist disability housing
Integrated the UNEP FI Principles for Sustainable Insurance
Published Proxy Voting Principles and published our Proxy Voting Summary
#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.
In support of our Responsible Investment Policy, Suncorp proactively seeks opportunities to engage in social impact investing that meets both our investment and social impact assessment criteria. In 2019–20, Suncorp expanded its social impact investments by becoming one of the first investors in the Synergis Disability Housing Fund, which aims to address the substantial undersupply of housing for people living with a disability. It's estimated that 12,000 National Disability Insurance Scheme (NDIS) participants currently have no access to much-needed specialist disability housing.
We remain committed to investments in renewable energy infrastructure and low-carbon solutions that deliver both financial and environmental outcomes. During the year, Suncorp’s $15 million commitment to the Palisade Renewable Energy Fund became fully drawn down. Palisade completed the development of a large-scale solar energy project in Townsville and progressed the Granville progressed the Granville Harbour wind project in Tasmania. As at 30 June 2020, Suncorp’s investment in low-carbon solutions was $236 million.
Proxy voting governance and activity
Suncorp is committed to ensuring all proxies are voted in a manner consistent with Suncorp’s Responsible Investment Policy and Corporate Responsibility Principles.
In 2019–20, Suncorp undertook a continuous improvementfocused review of our Proxy Voting Principles, with a strengthened commitment to the independence of the Chair, properly constituted polling on substantial matters, and communication about the Principles that will guide how we vote on shareholder sponsored resolutions. We also finalised and published our Proxy Voting Summary, which includes our Principles. This year, Suncorp voted all eligible proxy resolutions, voting at 336 meetings on 2,766 resolutions in 21 countries.
#Sensitive Sector Guidelines
To support implementation of the Responsible Investment and Responsible Banking & Insurance Policies, Suncorp has a range of Sensitive Sector Guidelines to respond to environmental and social risks in our business across our investment, banking and insurance portfolios.
In 2020, we strengthened our Fossil Fuels Sensitive Sector Guideline so Suncorp’s businesses will not directly invest in, finance or underwrite new thermal coal mining projects or electricity generation, or new oil and gas exploration or production. Suncorp has a target to phase out existing thermal coal exposures by 2025, as well as phase out underwriting oil and gas by 2025.
Suncorp will phase out of directly investing in oil and gas by 2040 by:
- immediately avoid the top 10% by kg CO2 per barrel of oil equivalent
- the top 25% by 2025
- the top 50% by 2030
- phase out of all oil and gas exploration and production by 2040.
We will continue to avoid any company involved in tar sands, or oil and gas exploration or production inside the arctic circle or the Great Australian Bight.
Under Suncorp's Responsible Investment Policy, our external investment managers are required to 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.
As at 30 June 2020, fossil fuel extraction and electricity generation activities made up less than 0.1 per cent of general insurance gross written premium. Fossil fuel exposure is less than 0.5 per cent of our insurance and shareholder investment assets, and less than 1.5 per cent of total investment assets under management (i.e. inclusive of wealth and investment assets managed on behalf of third parties). Suncorp's commercial lending portfolio has no exposure to fossil fuels via either extraction or power generation.
Suncorp will continue to underwrite, lend to and invest in companies whose business is clearly consistent with the transition to a net-zero emissions economy by 2050.
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 offers commercial opportunities to grow our business while at the same time supporting environmental objectives.
Under our Tobacco and Controversial Weapons Guidelines, we continued to exclude tobacco, recreational cannabis, land mines, cluster munitions, biological and chemical weapons from our portfolios.
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.