Introduction by Croakey: Australia’s five biggest super funds, which together manage $1 trillion of retirement savings, are failing to live up to their climate claims, according to analysis from the Market Forces environmental advocacy project.
The analysis found that the five funds in the study – AMP, Australian Retirement Trust, AustralianSuper, Aware Super and Commonwealth Super Corp – are relying on influencing fossil fuel companies via ‘active ownership’ of shares and ‘engagement’ to meet climate targets and manage growing risk.
“Yet the funds have failed to comprehensively adopt and implement effective active ownership practices identified by authoritative investor initiatives including the UN Principles for Responsible Investment and Science-based Targets Initiative,” it says.
Market Forces accuses the funds of “greenwashing” and says they are exposing themselves to legal risk by failing to effectively engage with companies expanding fossil fuels.
In the article below, submitted to Croakey by Market Forces, pharmacist and health manager Tracey Nayler outlines her concerns as a member of Australian Retirement Trust (ART).
According to a report on the analysis by the Australian Financial Review, an ART spokeswoman said the fund was already engaging with several fossil fuel companies, but planned to “be more focused in our company engagements and set objectives to track and monitor outcomes”. She said ART planned to share its climate change strategy publicly later this year.
See also this earlier article about Market Forces first national superannuation divestment day last year.
Tracey Nayler writes:
I am a health professional and this is a short story about holding my super fund to account on their climate commitments, for the wellbeing of current and future generations.
I was at an Australian Retirement Trust (ART) Annual Meeting recently. If you haven’t heard of ART before now, it’s one of the new mega superannuation funds, a merger of the former Queensland public sector fund, QSuper, and Queensland-based industry fund, Sunsuper.
The merger made ART one of the largest super funds of over 2 million members with more than $200 billion of their funds to invest. As a former Queensland hospital pharmacist, I have been a member for over 30 years and my fellow members are healthcare consumers or colleagues or both.
Health costs
Superannuation is an Australian success story according to the Global Pension Assets Study with our retirement money in super funds representing 175 per cent of GDP in 2020. With that kind of clout the industry’s purpose and integrity matter.
For me and many health practitioners, climate heating is a grave concern deepened by the physical and mental health impacts already evident, especially for our most vulnerable patients. Air pollution, heat, increasingly severe and frequent extreme weather events, and material, physical, cultural, social, and personal loss now impact our communities.
Health systems are already financially, structurally, and organisationally impacted directly and indirectly by climate change. In the health context, climate change is tangible and personal, not abstract and distant as it might appear for financiers.
At the ART annual meeting, a fellow member asked a question about the fund’s investment in coal mining and the ART Board’s response I can only describe using that old ‘one two’ boxing analogy. The Board’s verbal ‘jab cross’ insisted that engagement with fossil fuel extractors is an effective strategy to achieve net zero emissions targets and that members have the freedom to switch to their socially conscious option.
Taking an interest in these sorts of events, I know the response is typical. I guess it is repeated because it frames funds directors as rational, considered, and single-minded, while conveying the message a dissenting member is emotional, irrational, and exclusively endowed with ethical choices. It conveniently perpetuates the narrative that climate change is abstract or intangible, impersonal, and distant.
Barely wagging a finger
Many super funds, including ART, have net zero by 2050 policies to align with the Paris Agreement, and claim to pursue their environmental targets by influencing the fossil fuel companies among their (in fact, our) investments to change behaviour through advocacy, voting, and other interactions. Several frameworks for ‘stewardship’ or ‘active ownership’ – the industry terms given to this engagement and influence for change – have been developed to guide effective investor practice.
New analysis by Market Forces indicates ART and the remaining top four super funds are failing to comprehensively employ the recommended stewardship strategies. It is little wonder more than 100 new or expanded coal mining and gas production projects are planned in Australia when there is so much money available and the people investing it on our behalf barely wag a finger.
Many super funds have created ‘divested’ portfolios variably called ethical or socially responsible options that screen out, to at least some extent, unsavoury businesses like tobacco and gambling companies or carbon-intensive industries.
The suggestion that members sensitive to the issues of climate change can invest in these specialised portfolios implies the directors of such funds do not consider climate change poses a financial risk in their diversified options. That attitude can neither be reconciled with the disasters we have witnessed in the last years nor with the advice of Australia’s financial regulators.
For good reason, the ‘greening’ of healthcare, as outlined at the World Economic Forum, is quickly gaining momentum. Health practitioners are taking action to influence the systems they work within.
I am sure many of you have changed personal behaviours like your diets and consumption habits, how you travel, and how much energy you use at home. These changes are all necessary and we shouldn’t be dissuaded by illogical arguments from taking either personal or systemic actions or both, as emphasised in this British Medical Journal editorial.
Locked in to climate disaster
Reform in personal or healthcare system practices however, no matter how valid or valiant, cannot have the same impact as reform in the financial sector simply because investment choices made right now can lock us out of the means to decarbonise our societies and economies and lock us into a pathway to extreme global average temperature increases that are barely imaginable.
Superannuation is inextricably linked to the future, but members shouldn’t be fooled into thinking investment in an ethical option will alter financial sector attitudes to climate change risk or help to avoid the continued extraction and burning of fossil fuels that will serve to harm it. Health practitioners are held in relative esteem and are positioned to understand the urgency for change.
That’s why I’ve joined tens of thousands of people and organisations like Market Forces, asking their super funds and banks to end their investments expanding fossil fuel developments.
There are many simple steps everyone can take. Write an email, make a phone call or make an appointment to meet a manager in person to seek clear answers on your super fund’s investment options and path to net zero.
If you don’t get straight answers, you could join the growing tide of people voting with their feet or their money by choosing to put their hard-earned dollars into more sustainable options.
Regulators such as the Australian Competition and Consumer Commission or the Australian Securities and Investment Commission (ASIC) are calling out for consumers to report greenwashing, where super funds or other businesses are misrepresenting their environmental or ethical products.
We can all make a stand to make our communities safer and healthier by calling our super funds, banks and insurers to account.
