Two major super funds urged to reconsider Woodside investments

AustralianSuper and HESTA are being called out for failing to divest from Australia’s largest oil and gas company, resulting in undermining their own climate commitments and potentially toeing the line of greenwashing.

Over 500 healthcare professionals and HESTA members have signed an open letter to the fund’s chief executive, Debby Blakey, regarding its engagement with Woodside as the company continues to sanction new oil and gas fields. Most recently, Woodside decided to proceed with its Trion oil development, a new deepwater oil field in the Gulf of Mexico.

In the letter, the members noted the fund had placed AGL, Origin, Santos and Woodside on an engagement ‘watchlist’ in September 2022. It had requested these companies to demonstrate how their climate strategies aligned to the Paris Agreement goals and their business strategies aligned to a 1.5-degree emissions reduction scenario. 

However, neither a time frame for a response from these companies nor any consequences for failing to adequately respond was publicly communicated.

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“Since placing Woodside on HESTA’s watchlist, the company has failed to demonstrate alignment with a 1.5-degree pathway, instead moving in the opposite direction by progressing its plans to significantly increase oil and gas production,” the letter read.

“Woodside’s 20 June 2023 announcement of a final investment decision to proceed with Trion demonstrates HESTA’s escalation steps have failed to bring Woodside into line with a 1.5-degree pathway.

“Burning the oil contained in the Trion field would release 200 million tonnes of carbon dioxide, equivalent to nearly half of Australia’s total annual emissions.”

It stated Trion is just one example of Woodside’s oil and gas growth plans that are incompatible with global climate goals, with the company planning to increase production by 45 per cent by 2027.

“Woodside chief executive Meg O’Neill recently signalled to investors the company intends to continue exploring for new oil and gas with a view to maintaining production growth well into the 2030s,” the letter pointed out.

The members called on the fund to implement its escalation framework to the fullest extent, publicly denounce Woodside’s decision to sanction Trion and publish a time frame for divestment.

They added: “HESTA must live up to its claims of climate leadership by demonstrating that fossil fuel expansion is unacceptable as it is incompatible with a safe climate future.”

HESTA has acknowledged receipt of the letter, telling Super Review “like any letter of this nature, [it] will be considering a response in due course”.

Meanwhile, AustralianSuper is being pulled up for purchasing millions of Woodside shares and failing to use this increased influence over the company to demand an end to its oil and gas expansion plans.

Analysis by Market Forces revealed the $240 billion fund is one of the top five shareholders in Woodside, increasing to 85 million shares in 2022 across all investment options.

While almost all super funds in the study owned more Woodside shares in their default options in December 2022 than in 2021, many received Woodside shares from the company’s merger with BHP’s petroleum business, and some funds gained further Woodside shares through mergers with other funds. 

However, funds like AustralianSuper bought additional shares on top of shares received through mergers. 

“This new analysis shows AustralianSuper has continued that trend of buying more shares in Woodside, while others have gone in the opposite direction and reduced their stake,” Market Forces said. 

It noted that, while many funds opposed Woodside’s climate plans in 2022, some have since “painted themselves silly with Woodside’s greenwash”. 

“Both AustralianSuper and Hostplus voted with management on every 2023 AGM item. Brighter Super, Commonwealth Super Corp, GESB, MLC, Russell Investments and Super SA have not disclosed how they voted. AMP, Colonial First State, Commbank Group Super, Insignia Financial, Mercer and OnePath, State Super and UniSuper all disclosed ‘split’ votes on some AGM items,” Market Forces stated. 

“Across all investment options, AustralianSuper now owns a whopping 85 million shares in Woodside, or 4.5 per cent of the company, meaning AustralianSuper is among Woodside’s top five investors. However, AustralianSuper has failed to use this increased leverage to demand an end to Woodside’s fossil fuel expansion plans.”

Market Forces alleged the fund had backpedalled on its climate commitments by voting with management on every AGM item, including for the re-election of director Ian Macfarlane.

“By throwing its full support behind Woodside’s board, AustralianSuper has signalled its tacit approval of the company’s oil and gas expansion strategy.”

Collectively, Australia’s 30 largest super funds invest some $5.4 billion of members’ retirement savings in Woodside in its default options, Market Forces added. 

In a statement, an AustralianSuper spokesperson said the fund had met with Woodside on multiple occasions to discuss the company’s net-zero strategy. This included its capital allocation and carbon reduction initiatives.

“Before Woodside’s AGM, the board made a formal commitment to a 2024 Say on Climate vote and to increase engagement with shareholders to address Scope 3 emissions and customer demand. In light of these commitments from the company, we supported the three directors seeking re-election,” the spokesperson told Super Review. 

“We will actively assess Woodside’s climate strategy as disclosed in its forthcoming Say on Climate report and vote accordingly and will continue to engage with the company in order to understand how it plans to transition its operations to deliver long-term value in a low-carbon environment.”