Frank Pegan is the chief executive of Catholic Super and chair of the Investor Group on Climate Change (IGCC). In 2014 and 2015, he addressed world leaders at UN climate summits, advocating for climate policies and actions from institutional investors. As head of Catholic Super, Pegan has overseen investments of over $500 million in low-carbon transition investments and engagement with companies on sustainability. He was instrumental in founding IGCC in 2003 to educate the finance sector on climate change risks and opportunities.

1. www.financialstandard.com.au
8 February 2016 | Volume 14 Number 02Profile32
Imagine a room of world leaders including
Barack Obama and trying to convince them
in three minutes or less the climate views of
Australian and New Zealand institutional
investors. For Catholic Super chief
executive Frank Pegan, this was reality.
Darren Snyder explains.
In September 2014, Frank Pegan addressed
world leaders at the United Nations’ Cli-
mate Summit in New York. As chair of the In-
vestor Group on Climate Change (IGCC) and
as Catholic Super chief executive, his role was
to relay the importance of climate policies for
global capital investment markets and assure
leaders that institutional investors want to work
together to act on climate change.
“I was invited as chair of the IGCC to do a press
conference at the UN and to also have a breakfast
meeting with the World Bank and other investors,”
Pegan tells.
“After the press conference I had a meeting with
the top-50 world leaders. We sat down at a table and
talked about all the issues. In the room was Obama,
the French president and others.
“When you talk at the UN you get three min-
utes. If you talk longer than three minutes you get
“donged” and they turn your microphone off.”
At the time Pegan’s issue “was how we were
going to get governments, nations, sub-nations,
states and companies to make [climate policy]
commitments.”
Fast forward to December 2015 and Pegan was
further spreading the climate message on behalf
of Australian and New Zealand institutions at the
United Nations Climate Change Conference in
Paris, or COP21 (the 21st Conference of Parties)
as it is also widely known.
This time he advocated how institutions are in-
tegrating climate goals into portfolio actions and
using their influence to drive change in the market,
which could help keep global warming below two
degrees Celsius over the next decade – a framework
ambition for COP21.
Before presenting in front of Obama and co in
2014, Pegan had spent more than a decade cham-
pioning the corporate transition to low carbon and
climate resilient economies.
Under his leadership at Catholic Super, the $7
billion industry superannuation fund was the first
financial institution in Australia to be a signatory to
the UN Principles of Responsible Investment and
the first super fund to invite the carbon disclosure
project into Australia. The fund is also a signa-
tory to the global Investor Statement on Climate
Change, alongside 383 investors with more than
US$24 trillion in funds under management.
To date Catholic Super has invested more than
$500 million in low-carbon transition invest-
ments. The Responsible Investment Association
Australasia recognised Catholic Super in its 2015
Benchmark Report as a fund “with significant
core responsible investment offerings or with
funds that apply more than one responsible invest-
ment strategy.”
“If you look at our whole $7 billion, we invest
in all ranges of asset classes and all markets,”
Pegan says.
“We invest in coal, we invest in oil, we invest in
gas and all that stuff. You can’t avoid it.
“Where we can, and based on risk and return,
we will invest in areas that are climate friendly and
assess the sustainability.”
When it comes to responsible investment Pegan
explained at COP21 that it is the collaboration of
investors that provides power to engage with policy
makers, fund managers and individual companies.
Catholic Super operates in this fashion.
“We’ve collaborated with other super funds and
other institutions such as ACSI (Australian Coun-
cil of Superannuation Investors) and engage these
companies about what they’re doing,” Pegan says.
“There are some [institutions] who are divesting
and that’s fine but our solution is to transform, to
engage and to change.
“I want to live in the future in a sustainable
world. I want my kids to be living in a sustainable
world. I want them to have the amenities that I was
lucky enough to have when I was a kid. That to me
is fundamental.”
Pegan was instrumental in founding Investor
Group on Climate Change, as were executives at
VicSuper, AMP Capital and the former BT Gov-
ernanceAdvisoryServices.Hesaysthegroupstart-
ed in about 2003 during a meeting in Melbourne
on sustainability, long-term investments and the
impact on climate change on future returns.
“So I met and sat with them at a table and said
the only way we’re going to make this an issue
around risk and opportunity in the future is if we
form a group to start educating the whole sector
and that’s how it started,” Pegan says.
From just four original members the organiza-
tion has grown to 65 members today and repre-
sents the main institutions in Australia with about
$1 trillion funds under management.
Three years ago IGCC worked with its sister
fund in the UK and Europe (Institutional Inves-
tors Group on Climate Change (IIGCC), the Asia
Investor Group on Climate Change (AIGCC),
and the US-based Investor Network on Climate
Risk (INCR) to form the Global Investor Coali-
tion on Climate Change.
“And that represents more than 365 institutions
with about $24 trillion in funds under manage-
ment – and again it was about looking at invest-
ments from a long-term perspective and impact
that it would have to the future of the retirees,”
Pegan says.
“When you look at climate change [as an in-
vestor] it’s a long-term issue. I don’t get involved
with the science, I understand the science, but
I look at it from the long-term sustainability of
our investments.
“There’s an opportunity but also a high risk if
we don’t take it into consideration.”
The Peruvian-born and multi-lingual chief ex-
ecutive says a childhood spent mostly on the land
working for the family’s farm near Chiltern (Victo-
ria) meant he became a good money manager.
“My parents were self-employed and you get to
learn. They weren’t very well off because they had
to move three continents because of wars. In South
America they loved it but by the end of the 1950s
they made the decision to come to Australia,”
Pegan says.
“As part of the family business you were the
labourer. You became familiar with trades and
knowledgeable about money.”
However Pegan tells his first job after leaving
university was in the sciences and he didn’t move
in to finance until his 30s.
“I started running an accounting practice, do-
ing tax returns and providing business advice. And
then I moved in to working with the Catholic edu-
cation office as a finance consultant,” Pegan says.
This led to a role as chief financial officer for the
When you
look at climate
change [as an
investor] it’s a
long-term issue.
I don’t get
involved with
the science, I
understand the
science, but I
look at it from
the long-term
sustainability of
our investments.
Frank Pegan
THE CLIMATE CRUSADER
Catholic Education Commission, mainly based in
Victoria, before becoming involved at the national
levelwithpolicy,funding“andalltheformulasthey
used to have for funding schools.”
“Out of the finance and the CFO role, we were
making superannuation payments to about 24,000
people across Victoria into the Catholic Superan-
nuationFundatthetime.Iknewthefund.Wewere
one of the largest contributors,” Pegan says.
Pegan has been chief executive at Catholic Su-
per since August 2001, and prior to that he was a
trustee director at the fund for 10 years. Under his
leadership the fund’s membership has tripled, with
funds under management growing from about
$900 million to now more than $7 billion.
He adds it wasn’t easy work and there were a
couple of people who he would call mentors that
made him realise “you can do things better.” In
his first years as chief executive, Pegan’s role was
to build a new business because the fund – at that
time – had everything out-sourced.
He first constructed an investment team, in-
cluding hiring a chief investment officer, before
building a team around risk and compliance, then
adding a member services division. Pegan says he
has restructured the executive group about seven
times and built on it as the business grew.
“The biggest thing you can depend on is the
people around you,” Pegan says.
“Over time I worked my way up the ranks, left
jobs and came back. Doing all the science subjects
helped in the climate area.
“If you do the physics or chemistry subjects
you do a lot of hypothesizing. When you develop
your theory you test it and you always go back
to testing to see if it does or doesn’t work. A lot
of economics is about hypothesizing. The wrong
answer is to do nothing.” fs