Home > New legal opinion confirms super funds must manage climate risks

New legal opinion confirms super funds must manage climate risks

22 April 2021

Released today, a new legal opinion commissioned by Market Forces has confirmed super funds are legally required to understand and manage the material financial risks posed by climate change.

The new legal advice from barristers Noel Hutley SC and James Mack builds on a previous opinion they produced for Market Forces in 2017, which prompted Rest Super member Mark McVeigh to successfully sue the $55 billion fund over its approach to climate change action.

Some of the critical findings outlined in the legal opinion are:

Super funds must take a thorough approach to understanding the financial risks posed by climate change, including obtaining regular expert advice;
Where these risks are too great for a particular investment, funds must consider divestment – that is, shifting funds to less risky investments;
Multiple studies have confirmed that failing to limit global warming in line with the Paris climate goals would have serious negative financial impacts across the economy broadly, and therefore super funds’ entire portfolios; and
Target [investment] exposures, such as portfolio wide net zero emissions reduction targets, will need to be determined having regard to any financial risk posed by climate change.

Take action!

Tell your super fund to get your retirement savings out of companies increasing climate risk by expanding fossil fuels.

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Super fund*
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Your message to your super fund*
(you can personalise and amend this, your name will be automatically added at the end)
A new legal opinion released today confirms super funds are legally required to understand and manage the material financial risks posed by climate change.[1] Critically, the opinion states that where climate-related financial risks facing a particular investment are too great, funds should consider divestment or reallocation of funds to less risky options. It also states “Target [investment] exposures, such as portfolio wide net zero emissions reduction targets, will need to be determined having regard to any financial risk posed by climate change”. 23 of Australia’s 300 biggest companies, as well as many more internationally, are pursuing plans consistent with the failure of the Paris Agreement, including the expansion of the fossil fuel sector (see marketforces.org.au/outofline). These companies are driving global warming and the associated physical and transition risks that are expected to impact the entire economy. Multiple studies referenced in the new legal opinion have confirmed that failing to limit global warming in line with the Paris climate goals would have serious negative financial impacts across a fund’s portfolio. We know the rapid decarbonisation required to meet the Paris climate goals means fossil fuel industries must start declining immediately. Yet fossil fuel companies are spending billions of dollars to massively expand coal, oil and gas production, significantly increasing their own exposure to climate change transition risks, including stranded asset risk. With that in mind, I request the following information: 1. Have you read and understood the Market Forces Out of Line, Out of Time report? (marketforces.org.au/outofline) 2. How does the fund justify ongoing investment in any of the companies named in the report? In your answer, please refer to the requirements in paragraphs 6, 7 and 8 of the Hutley SC memorandum. 3. Does the fund rely on investment managers to manage investments that are exposed to climate change risks? What steps does the fund take to ensure investment managers are giving the trustee information about climate change risks and addressing those risks whilst investing? 4. How does the fund’s investment strategy, risk appetite statement, investment selection process, stress testing and investment governance framework incorporate climate change risks? 5. How does the fund ensure that its accountants, actuaries and consultants provide advice that is consistent with the reality of the financial risks posed by climate change? 6. Does the fund understand that, as climate change gets worse, there will be increasingly negative financial impacts to members investments on a portfolio-wide basis? What steps is the fund taking to avoid a worsening climate? Please provide this information within one month. Evidence cited in the new opinion reveals that increased global warming will negatively impact member returns over time. The companies responsible for driving warming and expanding the fossil fuel industry will contribute to member losses and environmental damage. The investments are exposed to the structural risks of climate change and are likely to be too risky over time. I expect the fund to take these risks seriously and withdraw any investments from those companies. Super funds managing in excess of 30% of (non self-managed) super assets, have excluded investments in some fossil fuel companies, while some smaller funds exclude fossil fuels entirely. I ask that you move from laggard to leader on climate risk management and, in accordance with the new advice, exclude investing in companies expanding the coal, oil or gas sectors. Sincerely
Your message to Australian Ethical*
(you can personalise and amend this, your name will be automatically added at the end)
I am writing to firstly thank you for not investing any of my retirement savings in companies that are pursuing fossil fuel expansion and/or basing their business on a scenario that would doom the Paris Agreement to failure (see: marketforces.org.au/outofline). However, there are many companies within my portfolio that are yet to demonstrate their alignment with the Paris climate goals. I ask that you engage with these companies to ensure they do so as soon as possible. For years companies have been asked to disclose and manage their climate change risks. Yet in spite of increasing calls to action from regulators and investors, many companies have failed to disclose strategies that are consistent with the goal of limiting global warming to 1.5°C. Please respond within 14 days, detailing your plans to engage with companies to ensure their business plans are aligned with the Paris climate goals. Sincerely
Your message to Aware Super*
(you can personalise and amend this, your name will be automatically added at the end)
A new legal opinion released today confirms super funds are legally required to understand and manage the material financial risks posed by climate change.[1] Critically, the opinion states that where climate-related financial risks facing a particular investment are too great, funds should consider divestment or reallocation of funds to less risky options. It also states “Target [investment] exposures, such as portfolio wide net zero emissions reduction targets, will need to be determined having regard to any financial risk posed by climate change”. 23 of Australia’s 300 biggest companies, as well as many more internationally, are pursuing plans consistent with the failure of the Paris Agreement, including the expansion of the fossil fuel sector (see marketforces.org.au/outofline). These companies are driving global warming and the associated physical and transition risks that are expected to impact the entire economy. Multiple studies referenced in the new legal opinion have confirmed that failing to limit global warming in line with the Paris climate goals would have serious negative financial impacts across a fund’s portfolio. We know the rapid decarbonisation required to meet the Paris climate goals means fossil fuel industries must start declining immediately. Yet fossil fuel companies are spending billions of dollars to massively expand coal, oil and gas production, significantly increasing their own exposure to climate change transition risks, including stranded asset risk. With that in mind, I request the following information: 1. Have you read and understood the Market Forces Out of Line, Out of Time report? (marketforces.org.au/outofline) 2. How does the fund justify ongoing investment in any of the companies named in the report? In your answer, please refer to the requirements in paragraphs 6, 7 and 8 of the Hutley SC memorandum. 3. Does the fund rely on investment managers to manage investments that are exposed to climate change risks? What steps does the fund take to ensure investment managers are giving the trustee information about climate change risks and addressing those risks whilst investing? 4. How does the fund’s investment strategy, risk appetite statement, investment selection process, stress testing and investment governance framework incorporate climate change risks? 5. How does the fund ensure that its accountants, actuaries and consultants provide advice that is consistent with the reality of the financial risks posed by climate change? 6. Does the fund understand that, as climate change gets worse, there will be increasingly negative financial impacts to members investments on a portfolio-wide basis? What steps is the fund taking to avoid a worsening climate? Please provide this information within one month. Evidence cited in the new opinion reveals that increased global warming will negatively impact member returns over time. The companies responsible for driving warming and expanding the fossil fuel industry will contribute to member losses and environmental damage. The investments are exposed to the structural risks of climate change and are likely to be too risky over time. I expect the fund to take these risks seriously and withdraw any investments from those companies. I am grateful Aware has taken initial steps by divesting from some thermal coal mining companies and setting portfolio emission reduction targets. I ask that you go further on climate risk management and, in accordance with the new advice, exclude investing in companies expanding the coal, oil or gas sectors. Sincerely
Your message to UniSuper*
(you can personalise and amend this, your name will be automatically added at the end)
A new legal opinion released today confirms super funds are legally required to understand and manage the material financial risks posed by climate change.[1] Critically, the opinion states that where climate-related financial risks facing a particular investment are too great, funds should consider divestment or reallocation of funds to less risky options. It also states “Target [investment] exposures, such as portfolio wide net zero emissions reduction targets, will need to be determined having regard to any financial risk posed by climate change”. 23 of Australia’s 300 biggest companies, as well as many more internationally, are pursuing plans consistent with the failure of the Paris Agreement, including the expansion of the fossil fuel sector (see marketforces.org.au/outofline). These companies are driving global warming and the associated physical and transition risks that are expected to impact the entire economy. Multiple studies referenced in the new legal opinion have confirmed that failing to limit global warming in line with the Paris climate goals would have serious negative financial impacts across a fund’s portfolio. We know the rapid decarbonisation required to meet the Paris climate goals means fossil fuel industries must start declining immediately. Yet fossil fuel companies are spending billions of dollars to massively expand coal, oil and gas production, significantly increasing their own exposure to climate change transition risks, including stranded asset risk. With that in mind, I request the following information: 1. Have you read and understood the Market Forces Out of Line, Out of Time report? (marketforces.org.au/outofline) 2. How does the fund justify ongoing investment in any of the companies named in the report? In your answer, please refer to the requirements in paragraphs 6, 7 and 8 of the Hutley SC memorandum. 3. Does the fund rely on investment managers to manage investments that are exposed to climate change risks? What steps does the fund take to ensure investment managers are giving the trustee information about climate change risks and addressing those risks whilst investing? 4. How does the fund’s investment strategy, risk appetite statement, investment selection process, stress testing and investment governance framework incorporate climate change risks? 5. How does the fund ensure that its accountants, actuaries and consultants provide advice that is consistent with the reality of the financial risks posed by climate change? 6. Does the fund understand that, as climate change gets worse, there will be increasingly negative financial impacts to members investments on a portfolio-wide basis? What steps is the fund taking to avoid a worsening climate? Please provide this information within one month. Evidence cited in the new opinion reveals that increased global warming will negatively impact member returns over time. The companies responsible for driving warming and expanding the fossil fuel industry will contribute to member losses and environmental damage. The investments are exposed to the structural risks of climate change and are likely to be too risky over time. I expect the fund to take these risks seriously and withdraw any investments from those companies. I am grateful UniSuper has taken initial steps by divesting from some thermal coal mining companies and setting emission reduction goals. I ask that you go further on climate risk management and, in accordance with the new advice, exclude investing in companies expanding the coal, oil or gas sectors. Sincerely
Your message to AustralianSuper*
(you can personalise and amend this, your name will be automatically added at the end)
A new legal opinion released today confirms super funds are legally required to understand and manage the material financial risks posed by climate change.[1] Critically, the opinion states that where climate-related financial risks facing a particular investment are too great, funds should consider divestment or reallocation of funds to less risky options. It also states “Target [investment] exposures, such as portfolio wide net zero emissions reduction targets, will need to be determined having regard to any financial risk posed by climate change”. 23 of Australia’s 300 biggest companies, as well as many more internationally, are pursuing plans consistent with the failure of the Paris Agreement, including the expansion of the fossil fuel sector (see marketforces.org.au/outofline). These companies are driving global warming and the associated physical and transition risks that are expected to impact the entire economy. Multiple studies referenced in the new legal opinion have confirmed that failing to limit global warming in line with the Paris climate goals would have serious negative financial impacts across a fund’s portfolio. We know the rapid decarbonisation required to meet the Paris climate goals means fossil fuel industries must start declining immediately. Yet fossil fuel companies are spending billions of dollars to massively expand coal, oil and gas production, significantly increasing their own exposure to climate change transition risks, including stranded asset risk. With that in mind, I request the following information: 1. Have you read and understood the Market Forces Out of Line, Out of Time report? (marketforces.org.au/outofline) 2. How does the fund justify ongoing investment in any of the companies named in the report? In your answer, please refer to the requirements in paragraphs 6, 7 and 8 of the Hutley SC memorandum. 3. Does the fund rely on investment managers to manage investments that are exposed to climate change risks? What steps does the fund take to ensure investment managers are giving the trustee information about climate change risks and addressing those risks whilst investing? 4. How does the fund’s investment strategy, risk appetite statement, investment selection process, stress testing and investment governance framework incorporate climate change risks? 5. How does the fund ensure that its accountants, actuaries and consultants provide advice that is consistent with the reality of the financial risks posed by climate change? 6. Does the fund understand that, as climate change gets worse, there will be increasingly negative financial impacts to members investments on a portfolio-wide basis? What steps is the fund taking to avoid a worsening climate? Please provide this information within one month. Evidence cited in the new opinion reveals that increased global warming will negatively impact member returns over time. The companies responsible for driving warming and expanding the fossil fuel industry will contribute to member losses and environmental damage. The investments are exposed to the structural risks of climate change and are likely to be too risky over time. I expect the fund to take these risks seriously and withdraw any investments from those companies. I am grateful AustralianSuper has taken an initial step by divesting from some thermal coal mining companies. I ask that you go further on climate risk management and, in accordance with the new advice, exclude investing in companies expanding the coal, oil or gas sectors. Sincerely
Your message to Cbus*
(you can personalise and amend this, your name will be automatically added at the end)
A new legal opinion released today confirms super funds are legally required to understand and manage the material financial risks posed by climate change.[1] Critically, the opinion states that where climate-related financial risks facing a particular investment are too great, funds should consider divestment or reallocation of funds to less risky options. It also states “Target [investment] exposures, such as portfolio wide net zero emissions reduction targets, will need to be determined having regard to any financial risk posed by climate change”. 23 of Australia’s 300 biggest companies, as well as many more internationally, are pursuing plans consistent with the failure of the Paris Agreement, including the expansion of the fossil fuel sector (see marketforces.org.au/outofline). These companies are driving global warming and the associated physical and transition risks that are expected to impact the entire economy. Multiple studies referenced in the new legal opinion have confirmed that failing to limit global warming in line with the Paris climate goals would have serious negative financial impacts across a fund’s portfolio. We know the rapid decarbonisation required to meet the Paris climate goals means fossil fuel industries must start declining immediately. Yet fossil fuel companies are spending billions of dollars to massively expand coal, oil and gas production, significantly increasing their own exposure to climate change transition risks, including stranded asset risk. With that in mind, I request the following information: 1. Have you read and understood the Market Forces Out of Line, Out of Time report? (marketforces.org.au/outofline) 2. How does the fund justify ongoing investment in any of the companies named in the report? In your answer, please refer to the requirements in paragraphs 6, 7 and 8 of the Hutley SC memorandum. 3. Does the fund rely on investment managers to manage investments that are exposed to climate change risks? What steps does the fund take to ensure investment managers are giving the trustee information about climate change risks and addressing those risks whilst investing? 4. How does the fund’s investment strategy, risk appetite statement, investment selection process, stress testing and investment governance framework incorporate climate change risks? 5. How does the fund ensure that its accountants, actuaries and consultants provide advice that is consistent with the reality of the financial risks posed by climate change? 6. Does the fund understand that, as climate change gets worse, there will be increasingly negative financial impacts to members investments on a portfolio-wide basis? What steps is the fund taking to avoid a worsening climate? Please provide this information within one month. Evidence cited in the new opinion reveals that increased global warming will negatively impact member returns over time. The companies responsible for driving warming and expanding the fossil fuel industry will contribute to member losses and environmental damage. The investments are exposed to the structural risks of climate change and are likely to be too risky over time. I expect the fund to take these risks seriously and withdraw any investments from those companies. I am grateful Cbus has taken an initial step by setting portfolio emission reduction targets. I ask that you go further on climate risk management and, in accordance with the new advice, exclude investing in companies expanding the coal, oil or gas sectors. Sincerely
Your message to Christian Super*
(you can personalise and amend this, your name will be automatically added at the end)
A new legal opinion released today confirms super funds are legally required to understand and manage the material financial risks posed by climate change.[1] Critically, the opinion states that where climate-related financial risks facing a particular investment are too great, funds should consider divestment or reallocation of funds to less risky options. It also states “Target [investment] exposures, such as portfolio wide net zero emissions reduction targets, will need to be determined having regard to any financial risk posed by climate change”. 23 of Australia’s 300 biggest companies, as well as many more internationally, are pursuing plans consistent with the failure of the Paris Agreement, including the expansion of the fossil fuel sector (see marketforces.org.au/outofline). These companies are driving global warming and the associated physical and transition risks that are expected to impact the entire economy. Multiple studies referenced in the new legal opinion have confirmed that failing to limit global warming in line with the Paris climate goals would have serious negative financial impacts across a fund’s portfolio. We know the rapid decarbonisation required to meet the Paris climate goals means fossil fuel industries must start declining immediately. Yet fossil fuel companies are spending billions of dollars to massively expand coal, oil and gas production, significantly increasing their own exposure to climate change transition risks, including stranded asset risk. With that in mind, I request the following information: 1. Have you read and understood the Market Forces Out of Line, Out of Time report? (marketforces.org.au/outofline) 2. How does the fund justify ongoing investment in any of the companies named in the report? In your answer, please refer to the requirements in paragraphs 6, 7 and 8 of the Hutley SC memorandum. 3. Does the fund rely on investment managers to manage investments that are exposed to climate change risks? What steps does the fund take to ensure investment managers are giving the trustee information about climate change risks and addressing those risks whilst investing? 4. How does the fund’s investment strategy, risk appetite statement, investment selection process, stress testing and investment governance framework incorporate climate change risks? 5. How does the fund ensure that its accountants, actuaries and consultants provide advice that is consistent with the reality of the financial risks posed by climate change? 6. Does the fund understand that, as climate change gets worse, there will be increasingly negative financial impacts to members investments on a portfolio-wide basis? What steps is the fund taking to avoid a worsening climate? Please provide this information within one month. Evidence cited in the new opinion reveals that increased global warming will negatively impact member returns over time. The companies responsible for driving warming and expanding the fossil fuel industry will contribute to member losses and environmental damage. The investments are exposed to the structural risks of climate change and are likely to be too risky over time. I expect the fund to take these risks seriously and withdraw any investments from those companies. I am grateful Christian Super has taken initial steps by divesting from some thermal coal mining, coal power, and extreme oil and gas companies. I ask that you go further on climate risk management and, in accordance with the new advice, exclude investing in companies expanding the coal, oil or gas sectors. Sincerely
Your message to Cruelty Free Super*
(you can personalise and amend this, your name will be automatically added at the end)
I am writing to firstly thank you for not investing any of my retirement savings in companies that are pursuing fossil fuel expansion and/or basing their business on a scenario that would doom the Paris Agreement to failure (see: marketforces.org.au/outofline). However, there are many companies within my portfolio that are yet to demonstrate their alignment with the Paris climate goals. I ask that you engage with these companies to ensure they do so as soon as possible. For years companies have been asked to disclose and manage their climate change risks. Yet in spite of increasing calls to action from regulators and investors, many companies have failed to disclose strategies that are consistent with the goal of limiting global warming to 1.5°C. Please respond, detailing your plans to engage with companies to ensure their business plans are aligned with the Paris climate goals. Sincerely
Your message to CSC*
(you can personalise and amend this, your name will be automatically added at the end)
A new legal opinion released today confirms super funds are legally required to understand and manage the material financial risks posed by climate change.[1] Critically, the opinion states that where climate-related financial risks facing a particular investment are too great, funds should consider divestment or reallocation of funds to less risky options. It also states “Target [investment] exposures, such as portfolio wide net zero emissions reduction targets, will need to be determined having regard to any financial risk posed by climate change”. 23 of Australia’s 300 biggest companies, as well as many more internationally, are pursuing plans consistent with the failure of the Paris Agreement, including the expansion of the fossil fuel sector (see marketforces.org.au/outofline). These companies are driving global warming and the associated physical and transition risks that are expected to impact the entire economy. Multiple studies referenced in the new legal opinion have confirmed that failing to limit global warming in line with the Paris climate goals would have serious negative financial impacts across a fund’s portfolio. We know the rapid decarbonisation required to meet the Paris climate goals means fossil fuel industries must start declining immediately. Yet fossil fuel companies are spending billions of dollars to massively expand coal, oil and gas production, significantly increasing their own exposure to climate change transition risks, including stranded asset risk. With that in mind, I request the following information: 1. Have you read and understood the Market Forces Out of Line, Out of Time report? (marketforces.org.au/outofline) 2. How does the fund justify ongoing investment in any of the companies named in the report? In your answer, please refer to the requirements in paragraphs 6, 7 and 8 of the Hutley SC memorandum. 3. Does the fund rely on investment managers to manage investments that are exposed to climate change risks? What steps does the fund take to ensure investment managers are giving the trustee information about climate change risks and addressing those risks whilst investing? 4. How does the fund’s investment strategy, risk appetite statement, investment selection process, stress testing and investment governance framework incorporate climate change risks? 5. How does the fund ensure that its accountants, actuaries and consultants provide advice that is consistent with the reality of the financial risks posed by climate change? 6. Does the fund understand that, as climate change gets worse, there will be increasingly negative financial impacts to members investments on a portfolio-wide basis? What steps is the fund taking to avoid a worsening climate? Please provide this information within one month. Evidence cited in the new opinion reveals that increased global warming will negatively impact member returns over time. The companies responsible for driving warming and expanding the fossil fuel industry will contribute to member losses and environmental damage. The investments are exposed to the structural risks of climate change and are likely to be too risky over time. I expect the fund to take these risks seriously and withdraw any investments from those companies. I am grateful CSC has taken an initial step by divesting from some thermal coal mining companies. I ask that you go further on climate risk management and, in accordance with the new advice, exclude investing in companies expanding the coal, oil or gas sectors. Sincerely
Your message to Future Super*
(you can personalise and amend this, your name will be automatically added at the end)
I am writing to firstly thank you for not investing any of my retirement savings in companies that are pursuing fossil fuel expansion and/or basing their business on a scenario that would doom the Paris Agreement to failure (see: marketforces.org.au/outofline). However, there are many companies within my portfolio that are yet to demonstrate their alignment with the Paris climate goals. I ask that you engage with these companies to ensure they do so as soon as possible. For years companies have been asked to disclose and manage their climate change risks. Yet in spite of increasing calls to action from regulators and investors, many companies have failed to disclose strategies that are consistent with the goal of limiting global warming to 1.5°C. Please respond, detailing your plans to engage with companies to ensure their business plans are aligned with the Paris climate goals. Sincerely
Your message to Hesta*
(you can personalise and amend this, your name will be automatically added at the end)
A new legal opinion released today confirms super funds are legally required to understand and manage the material financial risks posed by climate change.[1] Critically, the opinion states that where climate-related financial risks facing a particular investment are too great, funds should consider divestment or reallocation of funds to less risky options. It also states “Target [investment] exposures, such as portfolio wide net zero emissions reduction targets, will need to be determined having regard to any financial risk posed by climate change”. 23 of Australia’s 300 biggest companies, as well as many more internationally, are pursuing plans consistent with the failure of the Paris Agreement, including the expansion of the fossil fuel sector (see marketforces.org.au/outofline). These companies are driving global warming and the associated physical and transition risks that are expected to impact the entire economy. Multiple studies referenced in the new legal opinion have confirmed that failing to limit global warming in line with the Paris climate goals would have serious negative financial impacts across a fund’s portfolio. We know the rapid decarbonisation required to meet the Paris climate goals means fossil fuel industries must start declining immediately. Yet fossil fuel companies are spending billions of dollars to massively expand coal, oil and gas production, significantly increasing their own exposure to climate change transition risks, including stranded asset risk. With that in mind, I request the following information: 1. Have you read and understood the Market Forces Out of Line, Out of Time report? (marketforces.org.au/outofline) 2. How does the fund justify ongoing investment in any of the companies named in the report? In your answer, please refer to the requirements in paragraphs 6, 7 and 8 of the Hutley SC memorandum. 3. Does the fund rely on investment managers to manage investments that are exposed to climate change risks? What steps does the fund take to ensure investment managers are giving the trustee information about climate change risks and addressing those risks whilst investing? 4. How does the fund’s investment strategy, risk appetite statement, investment selection process, stress testing and investment governance framework incorporate climate change risks? 5. How does the fund ensure that its accountants, actuaries and consultants provide advice that is consistent with the reality of the financial risks posed by climate change? 6. Does the fund understand that, as climate change gets worse, there will be increasingly negative financial impacts to members investments on a portfolio-wide basis? What steps is the fund taking to avoid a worsening climate? Please provide this information within one month. Evidence cited in the new opinion reveals that increased global warming will negatively impact member returns over time. The companies responsible for driving warming and expanding the fossil fuel industry will contribute to member losses and environmental damage. The investments are exposed to the structural risks of climate change and are likely to be too risky over time. I expect the fund to take these risks seriously and withdraw any investments from those companies. I am grateful Hesta has taken initial steps by divesting from some thermal coal mining companies and setting portfolio emission reduction targets. I ask that you go further on climate risk management and, in accordance with the new advice, exclude investing in companies expanding the coal, oil or gas sectors. Sincerely
Your message to Local Government Super*
(you can personalise and amend this, your name will be automatically added at the end)
A new legal opinion released today confirms super funds are legally required to understand and manage the material financial risks posed by climate change.[1] Critically, the opinion states that where climate-related financial risks facing a particular investment are too great, funds should consider divestment or reallocation of funds to less risky options. It also states “Target [investment] exposures, such as portfolio wide net zero emissions reduction targets, will need to be determined having regard to any financial risk posed by climate change”. 23 of Australia’s 300 biggest companies, as well as many more internationally, are pursuing plans consistent with the failure of the Paris Agreement, including the expansion of the fossil fuel sector (see marketforces.org.au/outofline). These companies are driving global warming and the associated physical and transition risks that are expected to impact the entire economy. Multiple studies referenced in the new legal opinion have confirmed that failing to limit global warming in line with the Paris climate goals would have serious negative financial impacts across a fund’s portfolio. We know the rapid decarbonisation required to meet the Paris climate goals means fossil fuel industries must start declining immediately. Yet fossil fuel companies are spending billions of dollars to massively expand coal, oil and gas production, significantly increasing their own exposure to climate change transition risks, including stranded asset risk. With that in mind, I request the following information: 1. Have you read and understood the Market Forces Out of Line, Out of Time report? (marketforces.org.au/outofline) 2. How does the fund justify ongoing investment in any of the companies named in the report? In your answer, please refer to the requirements in paragraphs 6, 7 and 8 of the Hutley SC memorandum. 3. Does the fund rely on investment managers to manage investments that are exposed to climate change risks? What steps does the fund take to ensure investment managers are giving the trustee information about climate change risks and addressing those risks whilst investing? 4. How does the fund’s investment strategy, risk appetite statement, investment selection process, stress testing and investment governance framework incorporate climate change risks? 5. How does the fund ensure that its accountants, actuaries and consultants provide advice that is consistent with the reality of the financial risks posed by climate change? 6. Does the fund understand that, as climate change gets worse, there will be increasingly negative financial impacts to members investments on a portfolio-wide basis? What steps is the fund taking to avoid a worsening climate? Please provide this information within one month. Evidence cited in the new opinion reveals that increased global warming will negatively impact member returns over time. The companies responsible for driving warming and expanding the fossil fuel industry will contribute to member losses and environmental damage. The investments are exposed to the structural risks of climate change and are likely to be too risky over time. I expect the fund to take these risks seriously and withdraw any investments from those companies. I am grateful Local Government Super has taken initial steps by divesting from some thermal coal mining and coal power companies. I ask that you go further on climate risk management and, in accordance with the new advice, exclude investing in companies expanding the coal, oil or gas sectors. Sincerely
Your message to NGS Super*
(you can personalise and amend this, your name will be automatically added at the end)
A new legal opinion released today confirms super funds are legally required to understand and manage the material financial risks posed by climate change.[1] Critically, the opinion states that where climate-related financial risks facing a particular investment are too great, funds should consider divestment or reallocation of funds to less risky options. It also states “Target [investment] exposures, such as portfolio wide net zero emissions reduction targets, will need to be determined having regard to any financial risk posed by climate change”. 23 of Australia’s 300 biggest companies, as well as many more internationally, are pursuing plans consistent with the failure of the Paris Agreement, including the expansion of the fossil fuel sector (see marketforces.org.au/outofline). These companies are driving global warming and the associated physical and transition risks that are expected to impact the entire economy. Multiple studies referenced in the new legal opinion have confirmed that failing to limit global warming in line with the Paris climate goals would have serious negative financial impacts across a fund’s portfolio. We know the rapid decarbonisation required to meet the Paris climate goals means fossil fuel industries must start declining immediately. Yet fossil fuel companies are spending billions of dollars to massively expand coal, oil and gas production, significantly increasing their own exposure to climate change transition risks, including stranded asset risk. With that in mind, I request the following information: 1. Have you read and understood the Market Forces Out of Line, Out of Time report? (marketforces.org.au/outofline) 2. How does the fund justify ongoing investment in any of the companies named in the report? In your answer, please refer to the requirements in paragraphs 6, 7 and 8 of the Hutley SC memorandum. 3. Does the fund rely on investment managers to manage investments that are exposed to climate change risks? What steps does the fund take to ensure investment managers are giving the trustee information about climate change risks and addressing those risks whilst investing? 4. How does the fund’s investment strategy, risk appetite statement, investment selection process, stress testing and investment governance framework incorporate climate change risks? 5. How does the fund ensure that its accountants, actuaries and consultants provide advice that is consistent with the reality of the financial risks posed by climate change? 6. Does the fund understand that, as climate change gets worse, there will be increasingly negative financial impacts to members investments on a portfolio-wide basis? What steps is the fund taking to avoid a worsening climate? Please provide this information within one month. Evidence cited in the new opinion reveals that increased global warming will negatively impact member returns over time. The companies responsible for driving warming and expanding the fossil fuel industry will contribute to member losses and environmental damage. The investments are exposed to the structural risks of climate change and are likely to be too risky over time. I expect the fund to take these risks seriously and withdraw any investments from those companies. I am grateful NGS has taken initial steps by divesting from some thermal coal mining and coal power companies. I ask that you go further on climate risk management and, in accordance with the new advice, exclude investing in companies expanding the coal, oil or gas sectors. Sincerely
Your message to REST*
(you can personalise and amend this, your name will be automatically added at the end)
A new legal opinion released today confirms super funds are legally required to understand and manage the material financial risks posed by climate change.[1] Critically, the opinion states that where climate-related financial risks facing a particular investment are too great, funds should consider divestment or reallocation of funds to less risky options. It also states “Target [investment] exposures, such as portfolio wide net zero emissions reduction targets, will need to be determined having regard to any financial risk posed by climate change”. 23 of Australia’s 300 biggest companies, as well as many more internationally, are pursuing plans consistent with the failure of the Paris Agreement, including the expansion of the fossil fuel sector (see marketforces.org.au/outofline). These companies are driving global warming and the associated physical and transition risks that are expected to impact the entire economy. Multiple studies referenced in the new legal opinion have confirmed that failing to limit global warming in line with the Paris climate goals would have serious negative financial impacts across a fund’s portfolio. We know the rapid decarbonisation required to meet the Paris climate goals means fossil fuel industries must start declining immediately. Yet fossil fuel companies are spending billions of dollars to massively expand coal, oil and gas production, significantly increasing their own exposure to climate change transition risks, including stranded asset risk. With that in mind, I request the following information: 1. Have you read and understood the Market Forces Out of Line, Out of Time report? (marketforces.org.au/outofline) 2. How does the fund justify ongoing investment in any of the companies named in the report? In your answer, please refer to the requirements in paragraphs 6, 7 and 8 of the Hutley SC memorandum. 3. Does the fund rely on investment managers to manage investments that are exposed to climate change risks? What steps does the fund take to ensure investment managers are giving the trustee information about climate change risks and addressing those risks whilst investing? 4. How does the fund’s investment strategy, risk appetite statement, investment selection process, stress testing and investment governance framework incorporate climate change risks? 5. How does the fund ensure that its accountants, actuaries and consultants provide advice that is consistent with the reality of the financial risks posed by climate change? 6. Does the fund understand that, as climate change gets worse, there will be increasingly negative financial impacts to members investments on a portfolio-wide basis? What steps is the fund taking to avoid a worsening climate? Please provide this information within one month. Evidence cited in the new opinion reveals that increased global warming will negatively impact member returns over time. The companies responsible for driving warming and expanding the fossil fuel industry will contribute to member losses and environmental damage. The investments are exposed to the structural risks of climate change and are likely to be too risky over time. I expect the fund to take these risks seriously and withdraw any investments from those companies. I am grateful Rest has taken some initial steps, but I ask that you go further on climate risk management and, in accordance with the new advice, exclude investing in companies expanding the coal, oil or gas sectors. Sincerely
Your message to SunSuper*
(you can personalise and amend this, your name will be automatically added at the end)
A new legal opinion released today confirms super funds are legally required to understand and manage the material financial risks posed by climate change.[1] Critically, the opinion states that where climate-related financial risks facing a particular investment are too great, funds should consider divestment or reallocation of funds to less risky options. It also states “Target [investment] exposures, such as portfolio wide net zero emissions reduction targets, will need to be determined having regard to any financial risk posed by climate change”. 23 of Australia’s 300 biggest companies, as well as many more internationally, are pursuing plans consistent with the failure of the Paris Agreement, including the expansion of the fossil fuel sector (see marketforces.org.au/outofline). These companies are driving global warming and the associated physical and transition risks that are expected to impact the entire economy. Multiple studies referenced in the new legal opinion have confirmed that failing to limit global warming in line with the Paris climate goals would have serious negative financial impacts across a fund’s portfolio. We know the rapid decarbonisation required to meet the Paris climate goals means fossil fuel industries must start declining immediately. Yet fossil fuel companies are spending billions of dollars to massively expand coal, oil and gas production, significantly increasing their own exposure to climate change transition risks, including stranded asset risk. With that in mind, I request the following information: 1. Have you read and understood the Market Forces Out of Line, Out of Time report? (marketforces.org.au/outofline) 2. How does the fund justify ongoing investment in any of the companies named in the report? In your answer, please refer to the requirements in paragraphs 6, 7 and 8 of the Hutley SC memorandum. 3. Does the fund rely on investment managers to manage investments that are exposed to climate change risks? What steps does the fund take to ensure investment managers are giving the trustee information about climate change risks and addressing those risks whilst investing? 4. How does the fund’s investment strategy, risk appetite statement, investment selection process, stress testing and investment governance framework incorporate climate change risks? 5. How does the fund ensure that its accountants, actuaries and consultants provide advice that is consistent with the reality of the financial risks posed by climate change? 6. Does the fund understand that, as climate change gets worse, there will be increasingly negative financial impacts to members investments on a portfolio-wide basis? What steps is the fund taking to avoid a worsening climate? Please provide this information within one month. Evidence cited in the new opinion reveals that increased global warming will negatively impact member returns over time. The companies responsible for driving warming and expanding the fossil fuel industry will contribute to member losses and environmental damage. The investments are exposed to the structural risks of climate change and are likely to be too risky over time. I expect the fund to take these risks seriously and withdraw any investments from those companies. I am grateful Sunsuper has taken some initial steps, but I ask that you go further on climate risk management and, in accordance with the new advice, exclude investing in companies expanding the coal, oil or gas sectors. Sincerely
Your message to Verve Super*
(you can personalise and amend this, your name will be automatically added at the end)
I am writing to firstly thank you for not investing any of my retirement savings in companies that are pursuing fossil fuel expansion and/or basing their business on a scenario that would doom the Paris Agreement to failure (see: marketforces.org.au/outofline). However, there are many companies within my portfolio that are yet to demonstrate their alignment with the Paris climate goals. I ask that you engage with these companies to ensure they do so as soon as possible. For years companies have been asked to disclose and manage their climate change risks. Yet in spite of increasing calls to action from regulators and investors, many companies have failed to disclose strategies that are consistent with the goal of limiting global warming to 1.5°C. Please respond, detailing your plans to engage with companies to ensure their business plans are aligned with the Paris climate goals. Sincerely
Your message to Vision Super*
(you can personalise and amend this, your name will be automatically added at the end)
A new legal opinion released today confirms super funds are legally required to understand and manage the material financial risks posed by climate change.[1] Critically, the opinion states that where climate-related financial risks facing a particular investment are too great, funds should consider divestment or reallocation of funds to less risky options. It also states “Target [investment] exposures, such as portfolio wide net zero emissions reduction targets, will need to be determined having regard to any financial risk posed by climate change”. 23 of Australia’s 300 biggest companies, as well as many more internationally, are pursuing plans consistent with the failure of the Paris Agreement, including the expansion of the fossil fuel sector (see marketforces.org.au/outofline). These companies are driving global warming and the associated physical and transition risks that are expected to impact the entire economy. Multiple studies referenced in the new legal opinion have confirmed that failing to limit global warming in line with the Paris climate goals would have serious negative financial impacts across a fund’s portfolio. We know the rapid decarbonisation required to meet the Paris climate goals means fossil fuel industries must start declining immediately. Yet fossil fuel companies are spending billions of dollars to massively expand coal, oil and gas production, significantly increasing their own exposure to climate change transition risks, including stranded asset risk. With that in mind, I request the following information: 1. Have you read and understood the Market Forces Out of Line, Out of Time report? (marketforces.org.au/outofline) 2. How does the fund justify ongoing investment in any of the companies named in the report? In your answer, please refer to the requirements in paragraphs 6, 7 and 8 of the Hutley SC memorandum. 3. Does the fund rely on investment managers to manage investments that are exposed to climate change risks? What steps does the fund take to ensure investment managers are giving the trustee information about climate change risks and addressing those risks whilst investing? 4. How does the fund’s investment strategy, risk appetite statement, investment selection process, stress testing and investment governance framework incorporate climate change risks? 5. How does the fund ensure that its accountants, actuaries and consultants provide advice that is consistent with the reality of the financial risks posed by climate change? 6. Does the fund understand that, as climate change gets worse, there will be increasingly negative financial impacts to members investments on a portfolio-wide basis? What steps is the fund taking to avoid a worsening climate? Please provide this information within one month. Evidence cited in the new opinion reveals that increased global warming will negatively impact member returns over time. The companies responsible for driving warming and expanding the fossil fuel industry will contribute to member losses and environmental damage. The investments are exposed to the structural risks of climate change and are likely to be too risky over time. I expect the fund to take these risks seriously and withdraw any investments from those companies. I am grateful Vision has taken initial steps by divesting from some thermal coal and extreme oil and gas companies. I ask that you go further on climate risk management and, in accordance with the new advice, exclude investing in companies expanding the coal, oil or gas sectors. Sincerely
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Read the full legal opinion

Explainer – financial climate risks

According to the G20’s “Task Force on Climate-related Financial Disclosures (TCFD), the financial risks posed by climate change fall into two general categories:

Transition risks – posed by changes in public policy, the disruption to the energy sector from technological change, changes in demand for certain commodities (coal, oil and gas, for example), the threat of litigation brought against organisations that have failed to address climate change, and reputation damage to organisations that inhibit the transition to a low-carbon economy.
Physical risks – include the increased frequency and severity of extreme weather events, changed rainfall patterns, and the impacts of rising sea levels and sustained warmer temperatures.

What should our super funds be doing?

23 of Australia’s 300 biggest companies, as well as many more internationally, are pursuing plans consistent with the failure of the Paris Agreement, including the expansion of the fossil fuel sector. Almost every super fund in the country currently invests in some of these ‘Out of Line’ companies.

These Out of Line companies are driving increasing global warming, which increases physical climate risk across the entire economy. We also know the rapid decarbonisation required to meet the Paris climate goals means fossil fuel producing and generating assets need to also decline rapidly. Yet fossil fuel companies are spending billions of dollars to massively expand coal, oil and gas production, significantly increasing their exposure to climate change transition risks, including stranded asset risk.

Based on the findings and evidence set out in the new legal opinion, super funds should be:

Considering divestment from risky companies, such as those expanding fossil fuels, due to the increasing climate change-related physical and transition risks posed by their activities;
Advocating for companies and governments to drive rapid decarbonisation to limit physical and transition risks facing the broader economy;
Setting targets to rapidly reduce exposure to all fossil fuel sectors, as well as short, medium and long term targets to reduce portfolio emissions.

Where are they currently at?

Only a handful of ethical super funds – such as Australian Ethical, Future Super, Cruelty Free Super and Verve Super – exclude any investment in fossil fuels across the entire fund, which has them clearly leading the way on climate action. Some larger funds offer a fossil fuel free option, but this accounts for just a fraction of their funds under management, leaving the majority free to be invested in Out of Line companies.

Check out our new and improved super funds comparison table to find out where your super fund stands on climate action!

10 of the largest 40 super funds have confirmed they have divested from companies whose main business is mining coal for power generation (known as thermal coal), such as Whitehaven Coal and New Hope Group. Aware Super, Hesta, UniSuper, Suncorp, NGS Super, Vision Super, Local Government Super, and Media Super all have policies to exclude such investments, while AustralianSuper and Commonwealth Super Corporation have confirmed divestment but not set exclusion policies.

Local Government and NGS also exclude investments in coal power generators like AGL, and Suncorp will do this by 2025. Aware Super has massively reduced the carbon footprint of its investments by selling shares in some of Australia’s dirtiest companies, including AGL and Origin.

Suncorp, which is mostly an insurer but also has a retail super fund, has announced a plan to phase down its investments in oil and gas production to zero by 2040. This policy 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.

With far more work to be done to bring investments into line with the Paris climate goals, super funds are falling behind on climate action. And ‘falling behind’ isn’t where super funds want to be when it comes to managing climate risk – just ask Rest Super, which was sued over this very issue!

Of the 15 biggest super funds in the country (by assets under management), ten have taken no action to divest from or exclude any fossil fuel companies: Colonial First State, QSuper, MLC, BT Super, Sunsuper, AMP, Rest, Cbus and Hostplus. Sunsuper, Cbus and Rest have set targets to reduce portfolio emission to net zero by 2050, with Cbus also targeting a 45% reduction by 2030.

Take action – tell your super fund to take the lead on managing climate risk by excluding any investment in companies expanding fossil fuels

Disclaimer

The information provided by Market Forces does not constitute financial advice. The information is presented in order to inform people motivated by environmental concerns and take actions based on those concerns. Market Forces is organising data for environmental ends.

The information and actions provided by Market Forces do not account for any individual’s personal objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice.

Market Forces recommends all users obtain their own independent professional advice before making any decision relating to their particular requirements or circumstances. Switching super funds may have unintended financial consequences.

Market Forces does not receive funding from any super funds or other financial institutions.

For more information about Market Forces, please visit the about page of the site. To see how we profile super funds go to the methodology page.