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Media Release

Super funds ‘sustainable’ options invest in fossil fuel expansion

21 July 2022

MEDIA RELEASE: 21 July 2022

New analysis by Market Forces reveals several super funds are potentially misleading consumers and contravening the Australian corporate regulator’s ‘greenwashing’ advice.

Eight of 11 major super fund investment options labelled ‘sustainable’ or ‘socially responsible’ are investing in companies expanding the fossil fuel sector. The analysis finds that some so-called ‘sustainable’ options are investing in oil and gas giants Woodside, Santos, BP, Exxon and Shell, while one is invested in thermal coal miners, Whitehaven Coal and New Hope.

Regulator the Australian Securities and Investment Commission (ASIC) recently warned that offering or promoting sustainability-related financial products that are not ‘true to label’ or using ‘vague terminology’ could breach misleading and deceptive conduct and/or disclosure rules.

“Our analysis reveals these so-called ‘sustainable’ options aren’t  living up to what they claim to be, but are merely exercises in greenwashing,” said Market Forces Campaigner Brett Morgan.

“The very existence of a ‘sustainable’ investment option implies a super fund’s default option is somewhat ‘unsustainable,’ which is a major problem.

“Members who actively choose to invest in their fund’s ‘sustainable’ option expect that a high level of scrutiny and ethical consideration determine the option’s investment strategy.

“Discovering your retirement savings are invested in companies opening up new coal, oil and gas mines would be a big blow to members of ‘sustainable’ super fund options.”

Market Forces’ analysis has identified that the eight ‘sustainable’ options captured in the study had some investments in companies listed in the organisation’s Climate Wreckers Index. The index is made up of the 180 publicly-listed Australian and international companies with the largest fossil fuel expansion plans.

Super fund Mercer, for example, claims its ‘Sustainable Plus’ options exclude thermal coal companies, yet the ‘Sustainable Plus Growth’ option is invested in Whitehaven Coal and New Hope Corporation, among several other companies expanding the scale of the climate  wrecking thermal coal industry.

In fact, 7.45% of Mercer Sustainable Plus Growth’s listed equities investments are in companies that appear on the Climate Wreckers Index due to their fossil fuel expansion plans. This is higher than the average of default options Market Forces recently analysed (6.26%).

CareSuper’s ‘Sustainable Balanced’ option has 6.30% of its listed equities in Climate Wreckers Index companies, including the likes of Woodside, BP, Chevron, Exxon, and Shell.

The analysis reveals other so-called sustainable investment options also have holdings in Woodside Energy, the Australian oil and gas giant pursuing the highly-controversial Scarborough-Pluto project, which independent analysis has confirmed is inconsistent with the climate goals of the Paris Agreement.

“When challenged over their investments in climate wrecking fossil fuel companies, super funds often point members to their ‘sustainable’ investment options, yet some of these products are clearly failing to live up to their labels, as they invest in companies expanding the fossil fuel industry,” said Mr Morgan.

“HESTA, for example, often refers its climate-concerned members to its ‘Sustainable Growth’ option, yet this option invests in Siemens AG, a company heavily involved in developing new fossil gas power plants that are incompatible with the Paris climate goals.”

“Many members expect climate action to be core business for super funds. These funds need to divest from companies expanding fossil fuels across all investment options.”

Note to editor: The analysis is based on super fund holdings disclosures sourced from each fund’s website, and are effective as at 31 December 2021.