Analysis
What kind of future is the Future Fund really investing in?
Key findings
- The Future Fund is a top 10 shareholder in three of Australia’s worst climate wreckers – Woodside Energy, Santos and Whitehaven Coal – with more than $1 billion worth of shares in these companies combined.
- The Future Fund has increased its ownership stake in these three companies between December 2023 and June 2024.
- Analysis of the Future Fund’s voting history reveals it has failed to support a single climate-related shareholder proposal at these three companies since 2021.
The Future Fund is Australia’s sovereign wealth fund, established in 2006 to “strengthen the Commonwealth’s long-term financial position.” The Fund manages $225 billion on behalf of the Australian Federal Government, and this significant pool of capital is invested broadly in Australian and global markets.
This broad investment strategy makes the Future Fund a textbook example of a ‘universal owner,’ meaning that its portfolio is so large and diverse that it represents a cross-section of the global economy. This diversification reduces company- or industry-specific risk by spreading it out across a large number of different investments, but simultaneously ties the Fund’s performance to the overall health of the global economy. The only issue is that the economy as a whole is still vulnerable to systemic risks, such as climate change.
The Future Fund has a responsibility to mitigate systemic risks to its investment portfolio with a view to enhancing long-term value for its stakeholders, which include current and future generations of Australians. This means taking steps to understand and manage climate risk, which is being exacerbated by companies with fossil fuel expansion plans.
Investing in Australia’s worst climate wreckers
While the Future Fund states its purpose is to “invest for the benefit of future generations of Australians,” at the same time the Fund is actively undermining the wellbeing of future generations by failing to rein in the coal, oil and gas expansion plans of three of the biggest climate wreckers on the Australian Securities Exchange (ASX), or share market: Woodside Energy, Santos and Whitehaven Coal.
Our analysis has found that the Future Fund owns more than 1% of the outstanding shares in each of Woodside, Santos and Whitehaven, making it a top ten shareholder in all three companies.
The top ten shareholders in Whitehaven, Woodside, Santos
| Whitehaven Coal | Woodside Energy | Santos | ||||
| Investor | % shares outstanding | Investor | % shares outstanding | Investor | % shares outstanding | |
| 1 | Vanguard | 6.80% | Vanguard | 8.20% | Vanguard | 7.20% |
| 2 | Perpetual | 5.90% | Blackrock | 7.00% | State Street | 5.90% |
| 3 | Dimensional Fund Advisors | 3.20% | State Street | 6.60% | Blackrock | 4.00% |
| 4 | Boardwalk Resources | 3.20% | AustralianSuper | 6.10% | Colonial First State | 1.80% |
| 5 | Blackrock | 2.50% | MFS Investment Management | 1.60% | Dimensional Fund Advisors | 1.50% |
| 6 | GQG Partners | 2.10% | Future Fund | 1.20% | Future Fund | 1.10% |
| 7 | Fidelity | 1.60% | Dimensional Fund Advisors | 0.70% | JPMorgan Asset Management | 0.90% |
| 8 | Raymond Zage | 1.30% | Geode Capital Management | 0.70% | Argo Investments | 0.90% |
| 9 | Future Fund | 1.30% | Commonwealth Superann. Corp. | 0.70% | Fidelity | 0.70% |
| 10 | azValor Asset Management | 0.80% | netwealth | 0.60% | Commonwealth Superann. Corp. | 0.70% |
Source: Market Forces analysis of LSEG, Future Fund data. Analysis includes all sovereign wealth funds managed by the Future Fund.
Our analysis has also identified that the Future Fund’s stake in Woodside, Santos and Whitehaven has increased in the six months to June 2024. Even more concerning is that the Fund’s investments in these companies as a proportion of its Australian shareholdings is greater than these companies’ weights in the ASX 300 index, meaning the Future Fund is allocating a larger proportion of its Australian share investments to these climate wreckers than their relative size in the market.
Changes in Future Fund’s number of shares in Woodside, Santos, Whitehaven
| Company | # shares December 2023 | # shares June 2024 |
| Woodside Energy | 20.6 million | 22.9 million |
| Santos | 33.5 million | 37.2 million |
| Whitehaven Coal | 9.7 million | 10.5 million |
Source: Market Forces analysis of Future Fund data, company annual reporting. Analysis includes all sovereign wealth funds managed by the Future Fund.
Future Fund’s exposure to Woodside, Santos, Whitehaven as a proportion of Australian listed equities vs company weights in the ASX300 index, as at 30 June 2024
Consistently voting against climate action
The Future Fund acknowledges climate risk as a material financial risk in its 2022-2023 Annual Report and outlines some of the steps being taken to address it, including considering how votes are cast at portfolio company annual general meetings (AGMs).
“We also review climate risk during due diligence for specific investments, monitor how our investment managers are addressing climate risk where appropriate to their strategies, engage with the assets and companies we invest in, and integrate climate-related considerations into our proxy voting activities.” – Future Fund 2022-2023 Annual Report, page 46
Yet the Fund has consistently failed to use its voting power to push three of the most climate risk-exposed companies in its portfolio to end their fossil fuel expansion plans. The Future Fund has supported the board’s voting recommendations on nearly all items of business at Woodside, Santos and Whitehaven’s AGMs since 2021, while consistently voting against crucial climate-related shareholder proposals seeking to align these companies’ business plans with global climate goals.
Future Fund votes on director re-elections, remuneration plans, ‘say on climate’ proposals and climate-related shareholder proposals at Woodside, Santos and Whitehaven, 2021-2024
Voted in line with the Board’s recommendations Voted against the Board’s recommendations
| wdt_ID | wdt_created_by | wdt_created_at | wdt_last_edited_by | wdt_last_edited_at | Company | AGM year | Proposal | Vote |
|---|---|---|---|---|---|---|---|---|
| 5 | Santos | 2021 AGM | Re-elect Keith W. Spence | For | ||||
| 6 | Santos | 2021 AGM | Re-elect Vanessa A. Guthrie | For | ||||
| 7 | Santos | 2021 AGM | Remuneration Report | For | ||||
| 9 | Santos | 2021 AGM | Shareholder Proposal Regarding Disclosure of Paris-aligned Capital Expenditure and Operations | Against | ||||
| 10 | Woodside | 2021 AGM | Re-elect Christopher M. Haynes | For | ||||
| 11 | Woodside | 2021 AGM | Re-elect Richard J. Goyder | For | ||||
| 12 | Woodside | 2021 AGM | Re-elect Gene T. Tilbrook | For | ||||
| 13 | Woodside | 2021 AGM | REMUNERATION REPORT | For | ||||
| 15 | Woodside | 2021 AGM | Shareholder Proposal Regarding Disclosure of Paris-aligned Capital Expenditure and Operations | Against | ||||
| 16 | mperez | 18/10/2024 04:24 PM | mperez | 18/10/2024 04:32 PM | Whitehaven | 2021 AGM | REMUNERATION REPORT | Against |
Source: Future Fund voting disclosures, FOI disclosure log
The Future Fund’s voting record suggests it is not living up to its own claim of due diligence by adequately considering climate change in its voting decisions.
For example, the Fund supported Woodside’s woefully inadequate climate transition plan in 2022, yet joined the 58% of shareholders that voted against it in 2024, despite the fact that this plan has not materially changed since 2020. Woodside has repeatedly ignored investors’ climate concerns and voting against its climate plan this year was less than the bare minimum expected of any investor genuinely concerned about the company’s climate risk management approach. The Fund had an opportunity to raise pressure on Woodside’s Board to increase its climate ambition by voting against the re-election of its Chair, but failed to take it.
Can the Future Fund turn this dirty trend around?
The Future Fund must take stronger steps to manage climate risk, which means using its leverage as a significant shareholder to end the fossil fuel expansion plans of companies posing an outsized risk to the Fund’s entire portfolio. Otherwise, remaining invested in these climate wreckers cannot be justified.
Next week, the Future Fund will have the opportunity to demonstrate its power at Whitehaven Coal’s AGM, a company that has repeatedly ignored investor concerns. Any long-term investor still exposed to this company must be pulling out all the stops to end its coal expansion plans, and immediately and publicly divesting should this fail.
For the last few years, the Future Fund has voted against Whitehaven’s flawed remuneration policy, which incentivises the company’s executives to pursue coal expansion. Given Whitehaven has failed to update its policy after a shareholder strike at last year’s AGM, the Future Fund must increase pressure on this climate wrecker by voting against its remuneration plan and the directors up for reelection this year – Mark Vaile and Fiona Robertson – in their capacity as members of the remuneration committee.
Failure to do so would be out of line with the Future Fund’s stated purpose of investing for the benefit of future generations of Australians.
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