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Super funds accused of chest beating on climate change

Two major industry superannuation funds have this week made bold statements about their stance on climate change, but critics argue it may be "virtue signalling" with little substance.

UniSuper announced this week it is committed to achieving net zero absolute carbon emissions in its investment portfolio by 2050, a move the fund says is in align with the Paris Agreement.

The $83 billion fund said it already has $8 billion invested in ESG strategies and that it will now divest all companies deriving more than 10% of revenue from thermal coal mining.

"The announcement is long on rhetoric and short on detail. While UniSuper acknowledges that more needs to be done, this policy creates more questions than answers," Market Forces asset management campaigner Will van de Pol said.

"Without a clear plan to reduce exposure to all fossil fuel production and infrastructure to zero, UniSuper's new climate policy fails to live up to the fund's own promise of industry leadership on climate action."

The fund will also assess material medium and long term investments against a shadow carbon price, but Market Forces pointed out it has failed to provide details of the carbon price that will be used, or how and when it will be reviewed and increased over time.

Market Forces was also critical of UniSuper's ongoing investments in Woodside, Santos, Oil Search and Origin Energy and said the fund has made no commitment to drop these investments.

"Given many fossil fuel producers UniSuper invests in have expansion plans that are totally inconsistent with the Paris climate goals, the fund must be anticipating these companies will announce plans to wind down production in line with the Paris goals, or else the fund is heralding significant divestments in the coming year," van de Pol said.

Aware Super, formerly known as First State Super, also this week released a statement on climate change. The fund said it is time for investors to act "decisively and urgently" on the matter.

Like UniSuper, Aware Super has committed to divesting companies that derive more than 10% of revenue from thermal coal and to achieving net zero emissions by mid-century.

"Aware Super's position on climate change is not based on ideology but on data and research that tells us we need to act, and to act now," Aware Super investment committee chair Rosemary Kelly said.

"As long-term investors we can support the industries of the future to develop and grow, but it is critically important that we consider their long-term sustainability by asking 'will this sector or organisation still be a good investment for our members in 10 or 20 years' time?'"

In more super and climate change news this week, ClimateWorks released a report on the superannuation sector's momentum to net zero emissions.

"In June, HESTA set a portfolio-wide target of net zero emissions by 2050. In July, Aware Super announced plans to divest from thermal coal miners and reduce emissions in its listed equities portfolio by at least 30% by 2023. In August, Cbus announced a net zero by 2050 target, as well as a commitment to reduce portfolio emissions by 45% by 2030. And just this week, UniSuper has followed suit," ClimateWorks chief executive Anna Skarbek said.

"Most of these announcements meet the benchmark established last year by the UN-convened Net-Zero Asset Owner Alliance, whose members have committed to transition their investment portfolios to net zero by 2050 and are now working on methodologies and strategies that can achieve such an outcome."

The report identified super funds as particularly vulnerable to disruption caused by climate change due to their long-term investment horizon and noted that COVID-19 did  not seem to slow down funds in making progress on climate change.

However, the majority of super funds the report looked at were not aligned with the net zero by 2050 target. About 55% of funds (including AustralianSuper, BT, CareSuper, CBA Super, Hostplus, Macquarie, Mercer, QSuper, Rest, Sunsuper and TelstraSuper) were undertaking activities to reduce portfolio emissions intensity but were not aiming for net zero by 2050.

A further 20% (including Colonial First State, IOOF, Nulis and OnePath) had no portfolio emissions reduction targets at all.

Read more: UniSuperAware SuperClimateWorksAnna SkarbekAustralianSuperBTCareSuperCBA SuperCbusColonial First StateMarket Forces Asset Paris Agreement
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