Super funds weigh in on Australia’s $3.4bn nuclear investment problem

Australia’s super funds have invested approximately $3.4 billion in nuclear weapons companies, with only a few funds, like Hostplus, making significant divestments.

According to a report from The Australia Institute in partnership with Quit Nukes, the largest super funds in Australia have invested some $3.4 billion in firms associated with the “worst weapons of mass destruction.”

Following the entry into force of the United Nations Treaty on the Prohibition of Nuclear Weapons (TPNW) in January 2021, which puts nuclear weapons on par with other illegal and controversial arms such as chemical, biological, landmine, and cluster munitions, the report said that the Australian superannuation industry has been slow to adapt.

It said that while these other weapons are commonly excluded from investment portfolios, the industry has yet to consistently remove nuclear weapons companies from its investments.

The report, which examined the investments of 14 super funds in nuclear weapons companies, said that all but one of these major funds continue to hold sizable investments in the nuclear weapons sector.

The exception was Hostplus, which has excluded nuclear weapons from its portfolio since December 2021. The report also said that only Hostplus includes nuclear weapons in its definition of controversial weapons.

In contrast, AustralianSuper had invested approximately $1.5 billion in nuclear weapons companies by 31 December, while Aware Super, UniSuper, and HESTA followed with over $200 million each.

Moreover, the report said that looking at funds’ default MySuper options, Aware Super had the greatest percentage of its portfolio invested in NW companies of any fund in the report, at 0.91 per cent.

Commenting on these findings, Alice Grundy, research manager at The Australia Institute, said: “The most frustrating thing about the lack of process in this area is that excluding nuclear weapon companies from super portfolios is so easy.

“Divesting has an immaterial impact on investment returns”.

In January 2023, the Responsible Investment Association of Australasia (RIAA) implemented new requirements for certified responsible financial products to exclude companies involved in nuclear weapons, following advocacy from Quit Nukes.

Nevertheless, findings from The Australia Institute and Quit Nukes said that AustralianSuper continues to hold investments in nuclear weapons companies within its responsible investment option, making it one of only two funds to do so.

Namely, the report found that as of 31 December, AustralianSuper’s Socially Aware option held investments in eight nuclear weapons companies, totalling $20.7 million, which represented 0.71 per cent of the assets in that option.

“It’s frankly unconscionable to sell super fund members a responsible investment option and then use their money to invest in nuclear proliferation,” said Rosemary Kelly, director at Quit Nukes.

“The thing that makes this baffling is that investing in nuclear weapon companies is just completely unnecessary in the broader scheme of things.”

What the funds have to say

Super Review contacted several of Australia’s largest investors in nuclear weapons companies, based on their portfolio holdings as of 31 December 2023.

In response, most funds underlined their commitment to diverse investment options for their members.

Aware Super said that the Australian government has yet to ratify the TPNW, but that it will continue to monitor progress in the area.

“As a global institutional investor, our members’ investment portfolio has a very small exposure to a number of companies that provide a whole range of services including to the nuclear power and military equipment services industries,” a spokesperson for the fund told Super Review.

The spokesperson clarified that such exposures are via listed equities into international companies, whose NW-related revenue makes up a “very small” part of their overall business.

“In light of this evolving environment, we are currently reviewing the fund-wide definition of the controversial weapons exclusion,” the fund said, adding that it offers members, who do not wish to have exposure to nuclear energy, Socially Conscious investment options.

A representative of AustralianSuper, meanwhile, said that the purpose of Australia’s largest super fund is to “help members achieve their best financial position in retirement”.

“We manage over $341 billion on behalf of over 3.4 million members, who have diverse values, preferences and attitudes when it comes to investing,” the representative said.

“We have a range of investment options for members to choose from, including the Socially Aware option.”

AustralianSuper said that it implements a range of investment screens for this option, which are disclosed to its members.

Meanwhile, UniSuper described its exposure to nuclear weapons manufacturers, relative to the size of the fund, as “small”.

“This exposure equated to 0.02 per cent of funds under management as at 30 June 2024,” a spokesperson told Super Review.

“UniSuper is committed to the principles of responsible investment, and we consider key environmental, social and governance (ESG) factors across our major holdings.”

According to the $139 billion fund, it now offers members the choice of nine investment options that have no exposure to nuclear weapons manufacturing.

HESTA said that it appreciates the wide range of investment views among its member base, which exceeds 1 million.

“Accordingly, HESTA’s Sustainable Growth option offers more exclusions, while the Balanced Growth option (HESTA’s MySuper default) provides greater diversification,” the fund said.  

“HESTA clearly outlines both its controversial weapons and its separate nuclear weapons exclusions in publicly available disclosure documents.”

Specifically, the fund said it excludes companies deriving 5 per cent or more revenue from the manufacture of whole weapon systems or components developed for exclusive use in nuclear weapons, with a small holding of around 0.15 per cent of the total fund as of 30 June 2024.