Melbourne, Friday 15 April 2016
Market Forces is today welcoming the announcement by AustralianSuper – Australia’s largest super fund – to create a new sustainable investment option which excludes companies with fossil fuel reserves. However, the financial activist group is warning that despite the shift, the vast majority of the fund’s members will be left holding sinking fossil fuel stocks that contribute to global warming.
“We welcome the fact that AustralianSuper has joined the growing list of funds to move away from fossil fuel stocks, which not only wreck the environment but have proven over the past few years to be a consistent wealth destroyer,” said Market Forces Analyst Dan Gocher.
AustralianSuper will consolidate its three sustainable options into a single “Socially Aware” option, with estimated combined assets of nearly $2 billion. The new option will filter out companies with investments in coal, oil and gas reserves. Between $190 and $235 million worth of shares will be divested.
“Restricting investments in companies with fossil fuel reserves is an unusual approach as other funds including First State Super, HESTA and Local Government Super based their restrictions on fossil fuel revenue or net asset value”, said Dan Gocher.
“This decision will see companies like AGL, BHP Billiton, Rio Tinto, Seven Group and Wesfarmers excluded, while some global utilities will remain. Transport companies responsible for moving much of Australia’s coal exports will also remain.”
“Members of the new option will also remain exposed to fossil fuel infrastructure and debt.”
Australia’s superannuation industry has lost billions of dollars on investments in coal, oil and gas shares in the last two years. A recent study from Market Forces found that fifteen major retail, industry and public sector fund options have lost an estimated $5.6 billion – or up to $3024 per member – on fossil fuel equity investments in 2014 and 2015. Members of Australian Super’s default option lost an estimated $848 each on fossil fuel investments over the same period.
“The announcement of a ‘Socially Aware’ option is the first of its kind for AustralianSuper and testament to the growing push from fund members towards funds which address climate risk. However, creating a single sustainable option is not an adequate response to a systemic issue such as climate change”, Dan Gocher said.
“AustralianSuper has eschewed the financially and environmentally prudent option of a complete shift away from fossil fuels,” said Gocher. “The result is that the vast majority of Australians in the fund will continue to lose money on a product which is driving climate change.”
Globally, asset managers continue to announce plans to divest from thermal coal, the most greenhouse gas intensive fossil fuel. In February, the US$186 billion California State Teachers Retirement System (Calstrs) voted to divest from thermal coal companies, citing environmental and financial concerns. In December last year, Allianz, which manages €2 trillion, also announced it would wind back coal investments.