Some of Australia’s largest superannuation funds continue to have significant exposure to fossil-fuel investments, despite many of their members expressing views that their retirement savings should be used to help address climate change.
An analysis of 32 large super funds shows the extent to which some maintain exposures to companies whose businesses are involved in fossil-fuel extraction, or related power generation.
Market Forces, a climate change lobby group, has been able to peer into the portfolio holdings of super funds thanks to new regulations that require funds to publicly disclose their investments.
The campaigner deems 180 companies listed on the Australian Securities Exchange and on global sharemarkets to be climate wreckers.
Will van de Pol, asset management campaigner at Market Forces, says applying these fossil-fuel exposures across the entire $3. 5 trillion held in retirement savings, equates to more than $100 billion in investments.
That works out at more than $4800, on average, in member accounts that is invested in , van de Pol says.
It turns out net zero by 2050 targets, or other emissions targets, do little – if anything – to prevent investment in climate-wrecking companies, van de Pol says. This means that, despite having emissions targets, funds are often failing to take the immediate action required to facilitate a net zero emissions outcome, or the Paris climate goals, he says.
Market Forces’ analysis considers the exposure of each super fund’s default investment option, where most members still working have their retirement savings, to the 180 companies.
It then calculates that exposure as a percentage of the total amount that is invested directly in Australian and international shares.
The average exposure of the is 6. 26 per cent. UniSuper Balanced tops the list with an exposure at December 31 of 8. 36 per cent, followed by CareSuper Balanced (MySuper) with 8. 14 per cent.
The high numbers for both funds are due to their exposure in BHP. The miner accounts for more than 6 per cent of UniSuper’s investment holdings.
Aware Super’s High Growth option has the lowest exposure of the group analysed, at 3. 5 per cent. Vision Super Balanced Growth has the second-lowest exposure at 4. 22 per cent, followed by AustralianSuper at 4. 42 per cent.
John Pearce, UniSuper’s chief investment officer, defends the fund’s investment in BHP. He says most of the company’s revenue comes from iron ore and copper.
BHP also mines metallurgical coal – an essential ingredient in steel production. Pearce says the world needs steel and copper if it is to decarbonise and we see BHP as part of the solution, not the problem.
Woodside Petroleum is in the process of buying BHP’s oil and gas operations. Natural gas is seen by some as an essential transition fuel.
Pearce says: Only 0. 4 per cent of the whole fund – across all investment options – is invested in ‘pure extraction’ of fossil fuels, he says. After adding associated activities, such as its investments in companies that lay gas pipes, the exposure increases to 2. 5 per cent, he says.
At the release of BHP’s last September, its chief executive Mike Henry said the aim of the miner was to position it to thrive in a low-carbon world by minimising emissions from existing products, while providing the commodities the world needs to achieve a net zero future.
However, Market Forces’ van de Pol says: What BHP says does not translate into all of its actions.
It is growing some of its coal mines and palming-off its oil and gas operations, rather than managing them down, he says.
CareSuper, like UniSuper, has investments in South 32, which mines metals and metallurgical coal, and in oil and gas producer Santos.
A spokesperson for CareSuper says the fund has been recognised by the Responsible Investment Association Australasia (RIAA) and SuperRatings for its commitment to responsible investing.
The fund integrates environmental, social and governance (ESG) factors into all investment processes and decision-making, the spokesperson says.
TWU Super Balanced (MySuper) is in third spot with 7. 65 per cent of fossil-fuel related investments.
A spokesperson for the fund says reducing emissions can include engagement and tracking results with emitters, rather than just divesting in companies that keep emitting.
Simon O’Connor, chief executive of RIAA, says many funds have been voting for climate-change resolutions put to shareholders at company annual meetings, and some have made significant investments in renewable energy.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.