AustralianSuper’s new climate policy fails to raise the bar

17 November 2020

AustralianSuper’s new climate change policy has failed to even match, let alone improve on, the standard set by some of its big industry fund peers, disappointing members who were hoping to see the nation’s largest super fund take the lead on climate action.

While there are some positive elements to the new policy, it does not categorically rule out coal mining or coal power investments, set a path to exiting the oil and gas sector, nor set short- and medium-term decarbonisation targets.

This page contains factual information that is not intended to imply any recommendation or opinion about a financial product. The contents of this page do not constitute financial advice.

Take action

Some of the actions super fund members are taking to align their retirement savings with their vision of a stable climate future include:

  • Switching to other super fund providers that rule out fossil fuel investments entirely
  • Switching to fossil fuel-free investment options within their current fund
    • You can ask AustralianSuper about these options, and also make the point that it shouldn’t be up to members to have to find and switch to these options –  fossil fuel-free should be the fund’s default position!
  • Making an official complaint to the fund about its fossil fuel investments
  • Asking to meet with the fund to discuss their concerns
    • You may wish to use some of the points on this page to inform your complaint / conversation with AustralianSuper

Use this form to tell AustralianSuper what action you’re taking

What’s good in the policy

  • Commitment to achieve net zero carbon emissions by 2050 in the investment portfolio
  • Carbon intensity of Australian and international shares portfolio fell by 44% from 2013 to 2019
  • Confirmation in the media that AustralianSuper has divested from Whitehaven Coal, and no longer has any active* investments in thermal coal mining companies

*The fund retains some ‘passive’ investments in thermal coal mining companies, where those companies form part of an index portfolio in which the fund invests

What’s missing

  • A concrete exclusion ruling out any (passive or active) investments in thermal coal mining and coal power companies, now and in the future 
    • 8 of the largest 40 super funds – Aware Super, Hesta, UniSuper, Suncorp, NGS Super, Vision Super, Local Government Super, and Media Super – now exclude investment in thermal coal miners like Whitehaven Coal and New Hope Group
    • Local Government Super and NGS also exclude investments in coal power generators like AGL, and Suncorp will do this by 2025
  • A plan to exit investments in other fossil fuel sectors
    • Suncorp has announced a plan to phase down its investments in oil and gas production to zero by 2040, which will eventually see divestment from companies like Woodside, Santos and Origin Energy, whose oil and gas expansion plans are totally inconsistent with the climate goals of the Paris Agreement
  • Short- and medium-term decarbonisation targets
    • Aware Super has targets to reduce emissions in its listed equities portfolio by at least 30% by 2023, and 45% by 2030
    • Hesta has a target to reduce the absolute carbon emissions in its investment portfolio by 33% by 2030
    • Cbus has a target to reduce absolute portfolio emissions by 45% by 2030

What it all means

AustralianSuper has clearly set an important end-point of net zero portfolio emissions by 2050. By that date, any greenhouse gas emissions generated by companies AustralianSuper invests in will need to be offset by the company itself, or other investments in AustralianSuper’s portfolio that are carbon-negative (their operations withdraw carbon from the atmosphere).

Meeting this goal will require a range of actions, most importantly shifting investments away from high emissions companies and industries, and instead investing in low- and zero-carbon alternatives. The fund has made some good progress on decarbonising its portfolio over the past 6 years.

However, without any interim emission reduction targets or immediate commitments to divest from the most emissions-intensive companies, there is nothing to ensure AustralianSuper will do anything to reduce the climate impacts of its investment portfolio in the short-term. 

Further, the emissions intensity reductions achieved by AustralianSuper so far don’t take into account the emissions caused when investee companies’ products are used, as these downstream ‘scope 3’ emissions are not included in AustralianSuper’s portfolio emissions calculations. As an example, gas producer Woodside’s scope 3 emissions are almost 10 times as large as its operational emissions (scope 1 and 2), but these are not included in AustralianSuper’s portfolio emissions. 

Moreover, AustralianSuper’s policy fails to rule out any investment in even the most emissions-intensive fossil fuel: thermal coal. While it’s good to know the fund has no current investments in companies like Whitehaven Coal, without a clear exclusion policy, there is nothing to stop the fund investing again in the future.

For AustralianSuper to take its rightful place as a leader on climate action, it should not only be excluding coal mining and coal power investments, but also plotting a clear path to exit the oil and gas sectors as well. This could be done by setting interim portfolio emissions targets that include scope 3 emissions, or are complemented by targets to reduce investment exposure to fossil fuel reserves. Alternatively, AustralianSuper could follow the Suncorp example and announce a staged plan to reduce investments in oil and gas production over time, starting with the most emissions-intensive.