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Super funds increase ‘climate-wrecking’ exposures to $34bn
Australia’s 30 largest superannuation funds reportedly increased investment exposures to ‘climate-wrecking’ companies to over $34 billion in the past year.
A new report by Market Forces found the super funds increased exposure in their default investment options to companies developing new or expanded coal, oil, and gas projects by 50 per cent in 2022.
Together, these new projects could add the equivalent of 230 years of Australia’s national annual emissions, the environmental activist group said.
“Super funds are making a mockery of their own commitments to net zero by buying up wholesale in companies expanding fossil fuels and letting them get away with trashing our climate,” said Brett Morgan, superannuation funds campaigner at Market Forces.
“Australia’s super sector is collectively responsible for threatening members’ safety in retirement with a whopping $140 billion gamble against a stable climate future.”
This amounted to an average of more than $6,100 per member account, the analysis revealed, invested in this “small but devastatingly dangerous group of companies”.
Previously, the Australian Conservation Foundation (ACF) had announced that Australia’s 15 largest super funds were investing at least $25 billion in fossil fuel investments.
According to Market Forces’ new 2023 Climate Wreckers Index, which listed 190 global companies with the biggest plans to expand the fossil fuel industry, the overall exposure increase could be partially explained by Russia’s invasion of Ukraine driving up fossil fuel company share prices and BHP’s increased prominence on the ASX.
However, some super funds had also been buying millions of shares in these companies.
It noted that AustralianSuper increased its stake in Woodside by nearly 19 times in 2022 in its default investment option. Even discounting shares acquired through mergers, like Woodside taking over BHP’s petroleum business on 1 June 2022, the default option bought at least 30 million Woodside shares last year.
“Australia’s biggest super fund has bought up big in Australia’s biggest climate wrecker and a growing number of members are outraged by this,” Morgan added.
The analysis also found retail super funds were over-represented in the funds most exposed to the Climate Wreckers Index. Of the seven retail funds found in Australia’s biggest 30 super funds, four of their default or largest options appeared in the top 10 most exposed to Climate Wreckers companies.
The funds with the default investment options most exposed to the Climate Wreckers Index, as a proportion of share investments, were Commonwealth Super Corp — PSS Default (11.5 per cent), MLC — MySuper Growth (11.4 per cent) and Russell Investments — Goal Tracker (11.0 per cent).
Meanwhile, those with the least exposure were NGS Super — Diversified MySuper (6.4 per cent), Super SA — Triple S Balanced (6.8 per cent), and Cbus — Growth (7.2 per cent).
AUTHOR
Rhea Nath
Rhea L Nath is a journalist on Super Review and InvestorDaily, with a focus on funds management, superannuation, and institutional investment. Previously, she covered small business and entrepreneurship news at Dynamic Business and multicultural issues at Indian Link Media Group. In 2022, she was named Young Journalist of the Year at the NSW Premier’s Multicultural Communications Awards.
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TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.56 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.06 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.81 3 y p.a(%)
I wonder whether divestment in these organisations may place the Superfunds at risk of failing the Annual Performance Test and not being able to accept new members?
Perhaps the regulator could drive change by choosing alternative benchmarks (on a prospective basis)?