Australia’s top 30 superannuation funds have invested in just 3.9 per cent of the renewable energy infrastructure needed to meet Australia’s 2030 climate targets, a new report has found.
According to Market Forces, which analysed data from RenewMap and Green Street Infrastructure for the report, found that the top 30 super funds only directly contributed just $771 million to the $99 billion currently invested in Australian clean energy projects. That’s a mere 0.03 per cent of the $2.5 trillion in members’ retirement savings managed by these 30 funds.
“Super funds are often quick to highlight their renewable energy investments, but many funds continue to downplay their investments in companies with significant fossil fuel expansion plans,” the report said.
Meanwhile, Canadian pension funds have invested $408 million more in Australia’s renewable energy projects than Australia’s top 30 funds since 2020.
In fact, only six of the top 30 funds have direct investments in Australian renewable energy or battery storage projects. They are Aware Super, Cbus Super, HESTA, NGS Super, Prime Super and Rest.
Of the remaining 24 funds, 23 “may have indirect exposure” to renewable projects thanks to holdings with external asset managers and infrastructure funds. The organisation said it wouldn’t be able to quantify these investments without further disclosures from these funds, because asset managers “often don’t disclose in adequate detail in ‘unlisted’ markets.”
According to the report, 57.5 per cent of “primary finance” flowing to Australia’s renewable energy projects came from both domestic and overseas commercial banks, eclipsing the contributions from Australia’s super funds.
Brett Morgan, author of the report and head of Australian campaigns at Market Forces, said super funds are missing the opportunity to own clean energy infrastructure, which would power the economy for generations.
“Australian super funds need to set ambitious targets for increasing investments in Australian renewable energy projects, and report to members on progress.”
“Any super fund which supports the Paris Agreement’s climate goals must significantly ramp up its policy advocacy efforts to remove barriers to scaling investments in clean energy.
“Millions of working Australians could benefit from their retirement savings supercharging Australia’s clean energy revolution and delivering reliable, affordable renewable energy.”
Report recommendations
While some public policy barriers exist, the case studies of Rest’s stake in Collgar Wind Farm and Cbus Super’s investment in Star of the South offshore wind farm demonstrate, that these barriers can be overcome, the report said.
“Super funds must urgently and publicly commit to increasing their investments in Australian renewable energy infrastructure and battery storage. Funds need to publish clear data on their clean energy investments and actively advocate to the federal government for policy settings that enable the rapid scaling-up of super fund investments in clean energy.”
The report recommends five things that super funds need to achieve:
1.set public and measurable targets to increase investment and report progress annually
While some funds are setting targets for increasing investments in “climate solutions” or “lower carbon assets”, the commitments are “few and far between” across the industry.
2.provide clear disclosure to members on their fund’s direct renewable energy exposure, including project data
Funds should disclose the extent of their direct investment, including their “indirect” investments. This should also be addressed through public policy reform.
3.advocate for the removal of policy barriers to the federal government that prevent super funds from scaling renewable energy investments
One barrier includes the Your Future, Your Super performance test, which penalises funds for holding long duration infrastructure assets that renewable energy projects represent. Consultation for proposed changes to this with the Treasury will soon close on 19 June.
4.take a clear stance against the expansion of the fossil fuel sector, undermining the credibility of the super funds and the clean energy transition
Super funds should take a long term view in managing the risks and opportunities posed by climate change, and fossil fuel sector infrastructure would lock in decades of emissions. Long term institutions should play a constructive and impactful role in the transition. Leaders such as Vision Super and HESTA have publicly challenged oil and gas expansions from Woodside and Santos.
5.super fund members should hold their funds accountable and demand that they implement previous recommendations
Super funds should ensure their members’ best interests, which means delivering a future worth retiring to. Retirement savings are worth more than 4.4 trillion, and members have the power to push the super fund to take effective climate action.
