Are super funds all talk when it comes to climate change?

By Cameron Micallef

September 17 2020
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Superannuation funds have pledged to be net zero by 2050, but activists question whether these funds will deliver.

A report from ClimateWorks Australia in partnership with Monash University found that one in five superannuation funds that were studied has the intention to achieve net zero emissions in their portfolio by 2050 in alignment with the Paris Agreement.

The Paris Agreement’s central aim is to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.

“In 2018, superannuation funds owned almost half of Australia’s shares. By 2040, experts suggest they will own 60 per cent of ASX-listed equity,” said ClimateWorks CEO Anna Skarbek.

The 20 funds studied have a combined $1.5 trillion in assets under management, which ClimateWorks points out will lead to the rapid decarbonisation of the Australian economy.

“By setting targets now, super funds can create the context in which their commitments become realisable. Their own actions can bolster expectations and spur the development of methods for sectoral decarbonisation,” Ms Skarbek said.

Ms Skarbek acknowledged that, until recently, the superannuation industry had lagged behind other sectors. Many funds, she said, remain hesitant to set a net zero portfolio target, due to a lack of clarity around how they will achieve it.

However, despite HESTA, Aware Super, Cbus and UniSuper announcing strong statements about achieving a net zero rating, left activist group Market Forces question whether big super will deliver their targets

“The announcement is long on rhetoric and short on detail,” said Market Forces asset management campaigner Will van de Pol.

“While UniSuper acknowledges that more needs to be done, this policy creates more questions than answers. Without a clear plan to reduce exposure to all fossil fuel production and infrastructure to zero, UniSuper’s new climate policy fails to live up to the fund’s own promise of industry leadership on climate action.”

The fund has announced that it will divest companies deriving more than 10 per cent of revenue from thermal coal mining, but provided no commitments or targets to drop other fossil fuel investments – which include “significant stakes” in major Australian oil and gas producers.

“Given many fossil fuel producers UniSuper invests in have expansion plans that are totally inconsistent with the Paris climate goals, the fund must be anticipating these companies will announce plans to wind down production in line with the Paris goals, or else the fund is heralding significant divestments in the coming year,” Mr van de Pol said.

Mr van de Pol noted that the plans fall far short of those of Suncorp, which recently announced that it would no longer underwrite new oil and gas exploration and production and will phase out investing in those activities by 2040.

About the author

Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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