Super funds fail to deliver on climate change

By Maja Garaca Djurdjevic

February 03 2021
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Australian superannuation funds have been criticised for dragging their feet on thermal coal dumping, despite setting “ambitious” targets.

The Australasian Centre for Corporate Responsibility (ACCR) has taken fire at Australian superannuation funds over their lack of action on emissions reduction, despite setting “ambitious” targets.

In 2020, the super funds announced divestment from thermal coal companies, but according to the ACCR’s report into carbon cutting, they are “quietly implementing a divestment strategy that has not delivered real-world emissions reductions”.

“Investors are quietly abandoning companies that are proving ‘too hard’ to change, and failing to exhaust the tools available to change them. While they may be doing what is necessary to protect members’ interests, any suggestion that these actions will reduce real-world emissions is unsupported by evidence,” said Dan Gocher, director of climate and environment.

Instead, super companies are being encouraged to play a more active role in engagement with the companies they are invested in prior to any divestment, to ensure that all measures to support climate change action have been exhausted.

“Many investors have resisted calls for divestment from fossil fuels for years, claiming that engagement with companies would bring about the change required to reduce emissions. But investors have not demonstrated if and how they have applied pressure to emissions intensive companies prior to divestment,” Mr Gocher said.

According to Mr Gocher, one of the most important aspects of divestment is the signalling to other companies and investors.

The ACCR found that, to date, divestment decisions by Australian investors have not had as much impact as they could have had, had they been transparent about the conditions which would result in an escalation to divestment.

“Not a single director has been removed on climate grounds, nor has a remuneration report been opposed. Instead, this divestment happens in stealth and often without any public acknowledgement,” Mr Gocher said.

“Very few Australian-listed companies have set Paris-aligned emissions reduction targets. It is clear that years of polite conversations behind closed doors have failed to produce the results many investors have long promised. While some of these companies may well be incapable of change, and worthy of divestment, investors must be prepared to escalate their engagements,” he concluded.

About the author

Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of nestegg and Smart Property Investment. Email Maja at [email protected]

About the author

Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of nestegg and Smart Property Investment. Email Maja at [email protected]

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