Despite long-term commitments to achieving net-zero carbon emissions, Australia’s 30 largest super funds increased their investments in key coal, oil, and gas producers by 50 per cent in 2022, says environmental activist group Market Forces.
The superannuation or retirement funds in question raised investment in these companies to over $A34 billion ($US23 billion), revealing a gap between their sustainability commitments and their actions.
“Super funds are making a mockery of their own commitments to net zero by buying up wholesale in companies expanding fossil fuels and letting them get away with trashing our climate,” says Market Forces campaigner Brett Morgan.
Main offenders
Market Forces named AustralianSuper, which increased its stake in Woodside Energy Group Ltd, Australia’s leading independent gas producer, by approximately 19 times in 2022, as a leading offender.
AustralianSuper defended its decision, stating that gas was a crucial part of an “orderly energy transition” and that the fund would actively engage with Woodside to understand the company’s plans for transitioning to a low-carbon environment.
Market Forces claimed the funds’ increased stakes in fossil fuel companies could be attributed to heightened interest from shareholders in oil and gas businesses following the surge in commodity prices due to Russia’s war in Ukraine.
The Responsible Investment Association Australasia reported that the adoption of sustainability-themed investments, including renewable energy, doubled as a primary strategy between 2018 and 2019.
Investment definitions differ
Many funds have started excluding fossil fuel companies to some extent. Some exclude particularly emissions-heavy sectors such as thermal coal, while others rule out companies that derive a ‘material’ amount of their revenue from fossil fuel. However, the definition of ‘material’ differs from fund to fund, making comparisons between fossil fuel exclusions complex.
Some super funds partially exclude non-renewable energy, saying it enables them to drive change from within.
Chris Riedy, professor of sustainability governance at the Institute for Sustainable Futures, University of Technology Sydney, told CHOICE that such revenue-based exclusions are “a bit of a cop-out”.
“If you’re serious about filtering out companies that produce fossil fuels, you should cut them all out,” he says.
Jeremy Moss, a professor at the University of New South Wales Practical Justice Initiative, also says sector-based exclusions are “weak and pathetic” and “a hopeless response to a crisis”.
Super funds investing in fossil fuels can make a difference, says ASCI
On the other hand, the Australian Council of Superannuation Investors (ACSI), which advises super funds on engaging with companies as shareholders, believes there is a case for continuing to invest in and engage with fossil fuel producers.
ACSI argues that the transition to a renewables-based energy supply will take time, and responsible ownership of fossil fuels is preferable to disengaged investors owning these assets. While ACSI acknowledges that achieving change through engagement is difficult, it believes that super funds can make useful contributions.
One major obstacle to achieving change through divestment is that a significant portion of the world’s fossil fuel reserves is owned by companies not listed on a stock exchange, rendering shareholder action ineffective. For individuals considering switching to fossil fuel free super, it’s essential to weigh up several factors, such as whether to exclude fossil fuels entirely or only the worst offenders, and carefully read the fine print to ensure the fund’s exclusion aligns with personal values.
Interest in ‘sustainable super’ increasing
Although fossil fuel free super is a recent development, some options have performed well so far. Experts advise choosing super with strong long-term performance, bearing in mind that fees for fossil-free super can be higher than default super and that fees significantly affect retirement savings.
The growing interest in sustainable investments signals a potential shift in the industry, but it remains to be seen whether these funds will fully align their actions with their commitments to a low-carbon future.
As the urgency in tackling climate change increases, the pressure on super funds to make tangible progress towards their net-zero targets will undoubtedly grow. In the meantime, individuals must carefully consider their investment choices and the impact of their retirement savings on the environment, while keeping a close eye on the evolving landscape of sustainable investment strategies.
Do you care if your fund is increasing investment in fossil fuels? Why not share your opinion in the comments section below?
Also read: Advocate demands interest-free loans to help households switch to renewable energy
If they invested in renewables, they would go broke at a quick rate . You only have to look at big Jims budget and there was NO income from renewables only royalties from coal and gas just the opposite where they have to give you $500 to keep warm thanks to renewables
If you care about a solid future, the only real choice is to ensure that your Fund is investing in real industries such as the “fossil” fuel industry. This industry is actually producing something that gives a real return for the future.
The “renewable” energy sector is essentially a very large ponzi scheme propped up by excessive Government subsidies. When they cease, those “investments” will be worthless while the petrochemical industry with continue to power on.
The first obligation of any future fund is to invest in projects and industries that can be counted on to grow with a solid underpinning of their product. Any fund that is not doing so places every cent that has been placed with it by their clients at risk.
There will always be a solid demand for gas and crude oil (and it’s derivatives) as they are essential to our society.
Better your Fund has something to show and not rely on fairy dust and rainbows.