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Super funds bow to divestment pressure

A new report has revealed the number of companies Australia's largest super funds have rapidly divested amid pressure to invest with climate change in mind.

Nine of the 40 largest super funds in Australia have now announced divestment from some of the worst carbon emitting companies, according to research from Market Forces.

The combined assets under management of the super funds that have started to divest from fossil fuels is now $500 billion, representing almost one quarter of all superannuation assets under management (excluding SMSFs).

Market Forces' Out of Line Out of Time report highlighted 23 of the ASX-listed companies that it identifies as having a negative impact on the environment and climate change, with the report arguing that all these companies are worthy of divestment.

These companies included the likes of Woodside Petroleum, BHP, Santos, Washington H Soul Pattinson, Whitehaven Coal and Oil Search.

"Despite this recent progress, the majority of Out of Line companies continue to enjoy the financial backing of the majority of our super funds," Market Forces said.

"With this in mind, Market Forces has worked with shareholders to force super funds to have a difficult conversation with fossil fuel producers, with investors having to vote on formal proposals calling on companies to bring about an end to fossil fuel production."

For example, Hostplus has a $88.4 million holding in Woodside Petroleum, a $73.5 million holding in Santos and a $539.7 million investment in BHP. These investments prompted Market Forces to create a new campaign specifically calling on Hostplus to divest from fossil fuels.

It comes after their campaign calling on UniSuper to divest proved successful, with the fund announcing in September 2020 that it would divest thermal coal mining companies including Whitehaven Coal, New Hope Group and Washington H Soul Pattinson.

While AustralianSuper, Aware Super, UniSuper, HESTA, Rest and Cbus have all made commitments to divest thermal coal and/or to reach net-zero emissions by 2050, some of Australia's other largest super funds - Commonwealth Super Corporation, QSuper, Sunsuper and Hostplus - are bucking the trend.

BHP and Woodside are among QSuper's top 20 holdings by value in Australian shares, though the fund does not disclose how much those investments are worth. BHP is Sunsuper's second largest holding in Australian shares, representing an investment of at least $36 million, the report states.

Read more: Market ForcesBHPHostplusWoodside PetroleumSantosSunsuperUniSuperWashington H Soul PattinsonWhitehaven CoalQSuperAustralianSuperAware SuperCbusCommonwealth Super CorporationHESTANew Hope Group
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