Major Australian super funds are not walking the talk on climate action, with news emerging this week that Cbus, UniSuper, Hostplus, HESTA and AustralianSuper are all pouring billions into fossil fuel companies.
The revelations come in the wake of the devastating fires in Australia’s south east and as some of the world’s biggest investors are moving away from fossil fuels.
Cbus, which represents the construction and building industries, has $128 million invested in the likes of Glencore, Shenhua Energy Company and Exxaro, according to The Brisbane Times.
Higher education and research super fund UniSuper has got $170 million in thermal coal and $7.65 billion in oil and gas, as reported in the SMH. Industry super fund Hostplus invests in 26 oil and gas companies and eight coal companies.
AustralianSuper, Australia’s biggest super fund, has investments in three coal companies and eight coal companies. HESTA owns shares in Coal Indian and 12 oil and gas companies.
All five of these funds have committed to climate action and emissions reduction in some way.
Most are members or supporters of climate change groups such as the Investor Group on Climate Change, and have committed to lowering their carbon footprints through programs such as the Montreal Carbon Pledge.
The $170 billion-plus AustralianSuper even has a leadership role with Climate Action 100+, which is targeting more than 100 of the world’s largest listed corporate greenhouse gas emitters.
Most have a dedicated public position or policy on climate, or at least include it in their ESG policy. Cbus, for example, published a Climate Change Roadmap in 2018, which sets out climate-related investment activities over a two-year period.
HESTA also claims to be the first super fund to take its operations carbon neutral.
To make matters worse, analysis by the Australasian Centre for Corporate Responsibility obtained by Nine’s newspapers shows that Australian super funds – including industry super funds – are increasingly rejecting shareholder proposals that are pro-climate.
So, what’s the excuse?
In retort, the super funds argued that without a “seat at the table”, they are unable to nudge fossil fuel companies in a more positive direction.
Hostplus chief executive David Elia told the SMH that its ownership of shares in these companies “gives us the ability to engage and influence. Selling our holdings would deprive us of this important right.”
Another common argument against fossil fuel divestment is that if one pulls out, the spot will only be filled by another investor, doing very little to accelerate the transition out of coal.
Last year Hostplus chief investment officer Sam Sicilia said that shedding fossil fuel shares was a “waste of time”.
“Divestment is one investor selling shares to another investor – ineffective at combating climate change,” he said on Twitter.
But divestment has proven a successful tool in the past. For instance, a “divest and boycott” movement played a role in the demise of the apartheid regime in South Africa, pointed out Australian Ethical Investment’s chief investment officer David Macri last year.
Australian Ethical Investment is among a handful of Australian super funds to completely divest from fossil fuels. Future Super became the first super fund to snub fossil fuels when it was created in 2014.
A report released by Responsible Investment Association Australasia late last year found that only seven of Australia’s 57 biggest super funds had screened out fossil fuels, despite an increase in divestment in this category since 2016. Fossil fuels now trail tobacco and weapons as the third most excluded investment category.