By Brett Morgan, Investor Engagement Manager, Market Forces
As the nation’s largest super fund, what AustralianSuper says and does has significant consequences for our economy. Woodside’s walk-back on emissions and new energy targets in the past 24 hours can in part be attributed to AustralianSuper’s failure to take effective investor stewardship actions.
We saw AustralianSuper flex its influence in 2023 when the fund bought up tens of millions of shares in Origin Energy in an attempt to block its takeover by investment firm Brookfield. As a result, Origin remains listed on the ASX with a substantially less ambitious climate strategy.
With the retirement savings of more than 3.6 million people – equal to $430 billion – under its watch, AustralianSuper has a duty to protect and grow the nest eggs of an estimated one in seven working Australians. This includes managing long-term risks spanning multiple decades, like those posed by climate change.
But AustralianSuper has consistently fallen at the first hurdle in its race to become the super industry’s biggest climate laggard, failing to take key opportunities to steward some of Australia’s biggest polluters into line with agreed global climate goals.
Just yesterday, Australia’s largest oil and gas company Woodside walked back two already deeply inadequate climate targets it set earlier this decade: a target to invest US$5 billion in ‘new energy products’ and ‘lower-carbon services’ by 2030, and a target to take final investment decisions on these products and services with a total abatement capacity of 5 million tonnes per annum carbon dioxide-equivalent by 2030.
These walk-backs were delivered despite growing investor frustration with Woodside’s abject failure to deliver a credible climate transition plan, with many shareholders seeking greater climate ambition from the company for more than half a decade. This supposedly includes AustralianSuper, which joined a 50% vote in favour of a 2020 shareholder resolution at Woodside calling for Paris-aligned scope 3 emissions reduction targets.
AustralianSuper also counted itself among the shareholders that rejected Woodside’s flawed climate plans put to a vote at the company’s 2022 and 2024 annual general meetings, which saw consecutive world records of 49% and 58% votes against them, respectively.
Despite claiming to have “ongoing concerns” about Woodside’s climate strategy, AustralianSuper has failed to escalate beyond these ‘non-binding’ proposals and seek board accountability through binding votes against directors.
While other super funds such as HESTA have voted against the re-election of Woodside’s directors over multiple years and even publicly challenged the company’s oil and gas growth strategy, AustralianSuper has yet to put its members’ money where its mouth is.
AustralianSuper claims to support the climate goals of the Paris Agreement, which seeks to limit global warming to well below 2°C above pre-industrial levels, aiming for 1.5°C.
The Intergovernmental Panel on Climate Change has determined that emissions from existing fossil fuel infrastructure are enough to take us past the Paris Agreement’s critical 1.5°C global warming target, let alone climate pollution from new fossil fuel developments.
Yet AustralianSuper is letting Woodside off the hook for defying the scientific consensus by progressing an oil and gas growth strategy, which could result in more than four billion additional tonnes of climate emissions in our atmosphere. Market Forces estimates that this is equivalent to running all of Australia’s coal-fired power stations until nearly 2060.
Instead of grappling with and acting on the inevitable phase-out of fossil fuel production and use – something that pension funds must necessarily confront within the investment horizon of their younger members – AustralianSuper’s failure to challenge Woodside’s oil and gas growth strategy makes the fund complicit in these plans, which threaten our safety and economy.
Woodside’s climate walkback is an indictment of AustralianSuper’s inadequate stewardship efforts, and every other investor that has failed to demand a credible climate transition plan from Woodside or enact consequences when the company inevitably refused to deliver it.
Beyond Woodside, it was staggering last year to see AustralianSuper reinvest in a major coal player after making a song and dance about divesting from thermal coal in 2020. AustralianSuper has become the largest shareholder in Australian miner Whitehaven Coal, recently building its stake to a whopping 13.7% of the company. Whitehaven has the largest coal expansion plans of any company operating in Australia and appears committed to its aggressive coal growth strategy at all costs.
Market Forces has supported more than 115 shareholders to file a resolution at Whitehaven Coal this year, seeking clarity on how the company makes critical choices between additional shareholder returns and progressing its coal growth projects. This means AustralianSuper has an upcoming opportunity to live up to its climate claims and demonstrate its stewardship efforts are more than hot air.
If a stewardship program enables higher risk, lower return outcomes, then an incinerator that burns bundles of members’ hard-earned retirement cash may end up doing a better job.
As a long-term investor and Australia’s biggest super fund, AustralianSuper is not and cannot be a passive actor in the transition to a more secure, clean energy future.
With its younger members set to inherit a world informed by today’s investment decisions, AustralianSuper must pull out all the stops to manage the growing risks posed by climate change. The fund needs to use its considerable influence to demand and deliver an end to the fossil fuel expansion plans of major polluters like Woodside and Whitehaven, which are threatening a stable retirement for all super fund members.
This article was first published by the Australian Financial Review.