Aussie super funds take strong climate action

Researchers say superannuation organisations increasingly recognise the threat to investments posed by climate-related risks

Australian superannuation funds are ramping up their efforts to address climate change risks, new research shows.

ClimateWorks Australia and the Monash Sustainable Development Institute have just published a net zero assessment of Australia’s 20 largest superannuation funds, as part of a series of reports monitoring the climate actions and commitments of Australian governments and organisations.

The report said that three funds – Cbus, HESTA and UniSuper – have recently announced a net zero emissions target by 2050 across all their investment portfolios, making them “fully aligned” with the Paris Climate Agreement.

Aware Super (First State Super) has also said it will try to transition to net zero by 2050, but it has not committed to an explicit target.

Of the remaining funds that were assessed, 12 have taken action to reduce portfolio emissions but were not yet aligned with net zero by 2050, while four have failed to disclose any portfolio emissions reduction commitments.

ClimateWorks Australia CEO Anna Skarbek said these recent commitments reflected increasing international momentum for climate action from leading investors.                         

She said the super industry has lagged behind other sectors in the past and that many super funds were still hesitant to commit to net zero emissions. 

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

“By setting targets now, superfunds can create the context in which their commitments become realisable. Their own actions can bolster expectations and spur the development of methods for sectoral decarbonisation.”

Read more: Responsible investing flies into the mainstream market

Lead researcher and ClimateWorks head of national programs, Amandine Denis-Ryan, said that super funds increasingly recognised the threat to investments posed by climate-related risks.

She said these funds faced growing pressure from regulators and customers to take action during the climate crisis.

“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,” Denis-Ryan said.

“Just in the past few months, we found an important precedent has been set for this sector. These recent announcements provide hope we will see more funds taking a lead.”

The full report can be seen here.