Gas transition to take 'decades rather than years': UniSuper

UniSuper chief investment officer John Pearce said as the pace of decarbonisation moderates, natural gas is increasingly recognised as an important component of the global energy mix.

"The practical reality is that gas is likely to play a transitional role for decades rather than years," he said.

In UniSuper's ninth and final Climate Report, Pearce noted energy security and a fragmented global climate policy is reshaping the global energy and climate landscape.

"Governments are increasingly prioritising reliability and affordability alongside, and in some cases ahead of, decarbonisation objectives," Pearce said.

"Geopolitical instability, cost-of-living pressures, and the rapidly growing energy demands of industries such as artificial intelligence and data centres have fundamentally reshaped policy priorities."

The divergence between European Union which continues to strengthen climate framework and the United States going the opposite direction has created additional complexity and uncertainty, he said.

With gas playing an increasingly important role, Pearce said, companies are adjusting accordingly.

"Across industries, net-zero commitments that once reflected ambitious aspirations are being revised to align more closely with what organisations believe can be credibly delivered," he said.

"Industry alliances are experiencing declining membership and, in many cases, adopting more measured language and commitments."

This context is highly relevant for a diversified investment fund such as UniSuper, he added, whose investments ultimately represent ownership interests and debt exposures across a wide range of underlying companies.

"Changes in government policy and corporate commitments inevitably influence the pace and scale of the transition that companies can realistically undertake," Pearce said.

"Nevertheless, our commitment to engaging constructively with investee companies remains unchanged."

For the 2027 financial year and onwards, UniSuper will be reporting under Australia's new mandatory climate reporting standard (AASB S2), which will be incorporated into the annual report and financial statements.

UniSuper will move away from reporting climate emissions data for individual investment options and will now provide whole-of-fund figures as it prepares for mandatory climate reporting.

"Under AASB S2, UniSuper will be required to disclose its absolute gross greenhouse gas emissions, expressed in metric tonnes of CO₂ equivalent, for the reporting period ending 30 June 2027," Pearce said.

"In preparation for this requirement, our climate-related metrics are now presented at the whole-of-fund level rather than by individual investment option, as was the case in previous years."

Further, UniSuper has reduced its assessment of investee companies' Scope 3 emissions this year.

The $175 billion super fund said one notable pattern it observed with the early climate reporting was the uptake of transitional relief for Scope 3 emissions, with two-third electing to apply for the relief.

"As reporting of Scope 3 emissions was not mandatory during the transition period, many companies elected not to disclose this information. The resulting data gaps have limited both the comparability and usefulness of this metric," Pearce said.

UniSuper reported 19.9 tonnes of CO₂-equivalent per year for every $1 million invested, as of 30 June 2026, across 75% of its portfolio.

In comparison, the ASX 300 sits at 43.5 tonnes and the MSCI World Index at 17.1 tonnes.