New report finds superannuation sector is accelerating fossil fuel divestment

A new report from ClimateWorks Australia and Monash Sustainable Development Institute initiative Net Zero Momentum Tracker (NZMT) has found that Australia’s superannuation sector is accelerating its action on emissions reduction and science-based climate change. 

The finding is yet another demonstration of private sector divestment from fossil fuels – an economic trend in direct contrast to the Australian Federal Government’s desire to limp through the economic recovery from Covid-19 on a gas sector crutch. 

The report, an assessment of Australia’s 20 largest superannuation organisations which $1.5 trillion in total assets under management collectively, found that one-fifth of the organisations studied have accelerated their intention to achieve net zero emissions across their investment portfolios in the last three months alone.  

Funds such as Hesta, Cbus, and UniSuper, have all announced net zero emissions by 2050 targets for their investment portfolios recently, decisions ‘fully aligned’ with the Paris Climate Agreement, according to NZMT. 

Following Hesta’s call for the Morrison Government to end it’s energy policy vacuum and clean up its act, Aware Super followed suit and also announced plans to divest from thermal coal and reduce its emissions by at least 30% by 2023. 

Of the super organisations assessed, 60% are actively seeking out the reduction of emissions in their portfolios but had not yet set a specific timeline. Only 20% of those organisations have failed to disclose any emissions reduction commitments or activities. 

ClimateWorks Australia CEO Anna Skarbek says that recent announcements reflect increasing momentum internationally from leading investors. 

Skarbek did not hesitate to note that while super organisations are now taking more action on the climatic ramifications of their portfolio’s fossil fuel investment, they are slow to the party. Other sectors began divesting from fossil fuels and rooting out emissions in their portfolio’s some time ago. 

“In 2018, superannuation funds owned almost half of Australia’s shares,” said Skarbek, “by 2040, experts suggest they will own 60% of ASX-listed equity. That means the decisions they make matter enormously to the rapid decarbonisation of the Australian economy.” 

Of course, let’s not kid ourselves, avaricious investors are not acting with the environment in mind, superannuation organisations are divesting from fossil fuels because the writing is on the wall – black and brown energy is about as sound a long-term investment as asbestos underpants. 

According to ClimateWorks Head of national Programs, Amandine Denis-Ryan, super funds are increasingly recognising the threat of investments which carry climate-risk. “Over half of the superannuation funds considered in this report are pursuing emissions reductions through engagement, low carbon investments, divestment from exposed sectors and policy advocacy,” said Denis-Ryan. “As the expectations of the funds grow, we anticipate more pledging to reach net zero by 2050 across whole portfolios, with interim commitments and detailed transition strategies outlining how this will be achieved.”