- Four big Australian super funds have had their record on climate action slammed, with new data revealing they remain heavily invested in fossil fuels.
- AustralianSuper, UniSuper, Hostplus, and HESTA control around $360 billion of the reitrement savings for more than 4.5 million Australians.
- While they maintain they wield their stakes to pressure fossil fuel companies to improve, independent research shows they have often block climate-focused shareholder resolutions.
- Visit Business Insider Australia’s homepage for more stories.
Between them, they represent more than 4.5 million Australians and control $360 billion of their retirement savings.
AustralianSuper, UniSuper, HostPlus, and HESTA are some of the biggest and most powerful super funds in the country, and they've all invested billions of superannuation in fossil fuels despite making commitments to reduce climate risk, according to new data revealed by the Sydney Morning Herald and The Age newspapers. They have instead claimed they will remain invested to improve coal, oil and gas companies from within.
Not everyone is buying it.
"This concept of divestment versus influence is something that does get thrown around quite a lot within ethical investing circles, but I think where you have to draw a line is when it comes to fossil fuel companies because their core business model is in environmental degradation," FutureSuper managing director Kirsten Hunter told Business Insider Australia.
"There's no amount of shareholder influence that's going to change that. And so I hate that argument, and when it comes to fossil fuel companies in particular – it is really spurious."
In fact, research from the Australasian Centre For Corporate Responsibility (ACCR) provided to Business Insider Australia shows that even the suggestion
"While Australian companies are seen as global laggards on climate, Australian super funds routinely vote against reasonable shareholder proposals that seek improved disclosure or set emissions targets," ACCR climate and environment director Dan Gocher said in a statement. "These resolutions are designed to mitigate climate risk at the companies concerned."
"The reluctance by super funds to escalate issues and create discomfort with companies must be overcome if we are to have any chance of addressing Australia’s appalling record on emissions."
According to its data, in the last three years Hostplus supported just four of 16 such resolutions in Australia. That's consistent with its international record, voting in favour of 13 of 50, or roughly one quarter.
The other three are far more likely to support climate policies overseas, but fall short when it comes to asking the same of Australian companies.
AustralianSuper favoured four of 25 policies (or 16%) and 33 of 57 internationally (or 58%). UniSuper meanwhile has a supremely conflicted track record, voting against every one of the 16 Australian policies, while supporting 95% of international ones.
HESTA actually might have the best track record of the group, supporting 65% of domestic resolutions – 15 of 23 – and 78% of international ones – 91 of 120.
It's not good enough, according to Hunter.
"When you actually look at the voting record of these companies when given the opportunity to influence and act, they decline to do so," she said.
"It's absolutely hypocritical for these super funds to justify their continued investment in those companies so that they can influence them, and then not take their opportunity to actually do it."
Each of the four big super funds has substantial holdings in fossil fuel companies
AustralianSuper, the single biggest super fund in the country, handles $166 billion for 2.2 million members. It has a stake in three coal companies, including Whitehaven, South32 and New Hope, as well as eight oil and gas companies including China Petroleum and Chemical Corp, which has been found guilty of chronic pollution and several deadly explosions.
UniSuper controls $85 billion for 475,000 members, mostly employed in tertiary education. While those very same academics and researchers may be better informed on climate science, their retirement savings may directly be funding climate change. To be exact, $7.82 billion in gas and oil companies, including Woodside Petroleum and Santos, and a further $170 million in 14 thermal coal companies.
Health and community industry fund HESTA holds $55 billion for 860,000 Australians. It owns a stake in Indian Coal, the world's largest single coal producer which auditors have found to be polluting water sources among other indiscretions. HESTA also invests in 12 oil and gas companies including Santons, China Gas, and Calima Energy.
Hostplus, the hospitality industry fund, manages $53 billion for more than one million members. Their money is tied up in no less than 26 oil and gas companies including BHP Billiton and Abu Dhabi National Oil Company – the 12th largest producer in the world – alongside eight coal companies including Whitehaven Coal.
Each maintains they're committed to climate action and defends their strategy
Each of the four funds have made various commitments to consider climate risk and insist they're making in-roads.
Three of the four – AustralianSuper, UniSuper and HESTA – are members of Climate Action 100+, an investor advocacy group that supports "the Paris Agreement and the need for the world to transition to a lower-carbon economy".
By becoming a signatory, each ostensibly says they are "aware of the risks climate change presents to our portfolios and asset values in the short, medium and long term."
While Hostplus isn't a Climate Action 100+ signatory, it lays out a similar commitment in its own investment policy.
Each, therefore, pledges to appreciate climate change risk at least from a financial standpoint – if not an actual ethical or environmental perspective.
HESTA maintains the strategy is making a difference.
"Active ownership that involves engagement with companies and share voting can produce significant results," a HESTA spokesperson told Business Insider Australia. "Today BP announced it aims to be carbon neutral by 2050. It is unlikely this commitment would have been made without sustained pressure from shareholders, including HESTA."
The fund also points out it has banned new thermal coal investments and is proactively funding green tech.
"Through our considerable investments in renewable energy and cleantech private equity HESTA is also supporting the transition our economy needs to make. We understand there will be a wide range of views among our more than 860,000 members. That’s why we provide HESTA members with an investment option, Eco Pool, which aims to be completely fossil fuel-free."
Hostplus CEO David Elia echoed the argument, noting the named fossil fuel companies made up just 2% of Hostplus' investments.
"On the whole, we have found engagement and voting to be very effective tools," Elia told Business Insider Australia in a statement. "Hostplus [also] offers its members a variety of investment options including the Socially Responsible Investment Option, which excludes all companies that make a material amount of money from the most carbon-intensive fossil fuels, being thermal coal, oil sands, coal-fired power and the conversion of coal to liquid fuels and feedstock."
Neither fund indicated why they, AustralianSuper and UniSuper refused to apply pressure consistently.
Perhaps most significant, however, is the fact that Elia notes less than 1% of its members have actually signed up for that ethical option, highlighting another issue entirely: disengagement by Australians with their super.
Hunter acknowledges this too poses a problem with a relatively small amount of super allocated to renewables compared to fossil fuels.
"The superannuation industry owns about half of all the shares on the ASX, so super funds are the biggest owners of our biggest companies. So employees and members can have a huge influence on what corporate Australia does," she said.
"There's real power in that if super funds are willing to step up and take action."
AustralianSuper and UniSuper were both contacted for comment.