Super funds still undermining climate goals, despite $1 trillion shift out of coal

What future is your super funding?

15 February 2022

New research from Market Forces reveals every major super fund in the country continues to undermine the Paris Agreement and net zero by 2050 climate goals by investing in companies expanding the scale of the fossil fuel industry.

However, the research shows some movement, with super funds collectively managing in excess of $1 trillion taking steps to divest from thermal coal mining companies. In the past year, some super funds have for the first time also begun to extend divestments to oil and gas producers.

Of the 40 funds analysed in the study, 14 have either substantially divested from, have some form of exclusion on, or have plans to phase out thermal coal mining companies, such as Whitehaven Coal and New Hope, across the entire fund. This has increased from eight out of 40, based on similar research from Market Forces conducted in 2020.

For the first time, super funds have also started divesting oil and gas producers like Woodside and Santos. Five funds have either substantially divested from, have some form of exclusion on, or have plans to phase out oil and gas producers. Three of these five funds have significantly reduced their holdings in Woodside and Santos, including Australia’s biggest super fund, AustralianSuper, which manages more than $244 billion.

“Clearly, many super funds are seeing the writing on the wall for the thermal coal miners like Whitehaven Coal and New Hope, and we’re now witnessing the start of a similar trend for oil and gas producers,” says Market Forces campaigner Brett Morgan.

“This shift is a start, but more big super funds need to step up and turn this trickle of oil and gas divestment into a tidal wave if we’re to have a shot at meeting the climate goals of the Paris Agreement.”

In May, the International Energy Agency’s (IEA) Net Zero by 2050 report concluded there’s no room for new fossil fuel supply projects. The United Nations Environment Programme (UNEP) has also confirmed that global fossil fuel production “must start declining immediately and steeply” in order to meet the 1.5°C temperature goal of the Paris Agreement. However, despite 28 of the 40 funds in Market Forces’ study having either set net zero emissions targets or voiced support for the climate goals of the Paris Agreement, all funds continue investing in companies pursuing new fossil fuel projects.

“By continuing to invest members’ retirement savings in companies with massive fossil fuel expansion plans, super funds are undermining their own climate statements and targets,” says Morgan.

“Super funds positioning themselves as ‘climate leaders,’ such as HESTA and Aware Super, are falling behind their industry peers like UniSuper, AustralianSuper, and Vision Super, which have substantially divested from climate-wrecking oil and gas producers Woodside and Santos. It’s time for funds like these to step up.”

A 2021 legal opinion commissioned by Market Forces found that, where climate-related financial risks facing a particular investment are too great, super funds should consider divestment. Regulator APRA has also released climate risk guidance, suggesting super funds should consider developing plans and applying limits to manage exposure to sectors with high climate risks.