Australia’s second largest super fund Australian Retirement trust (ART) has just released a climate change roadmap, putting some of Australia’s biggest polluting businesses on notice. This is a major move by a giant fund, and a big moment for people power! And with ART stepping up, the pressure is now on the rest of the superannuation sector to match ART’s ambition.
After years of pressure from their members, ART - a $260 billion fund formed from the merger of QSuper and Sunsuper - has become the largest fund in Australia to adopt a 2030 emission reduction target. They have also promised to create consequences for companies who fail to take effective and timely climate action.
Collectively, Australian super funds own about $3.2 trillion in investments like shares, buildings and infrastructure - an enormous slice of the Australian economy. Super funds are usually one of the largest shareholders in polluting companies like Santos and Woodside, which means they can apply pressure and motivate these companies to move faster and more decisively on climate change. What we choose to fund and invest in now is the future we create.
ART now has a target to reduce the emissions generated by their shares, buildings and infrastructure of 43% by 2030. But scientists say our emissions need to go down by 75% if we’re to have a chance of limiting global warming to 1.5 degrees. Nevertheless, this is a big first step for ART, who will review their climate change target in two years’ time. It will be important for that review to lift ambition to have the biggest impact possible.
Over recent years, some super funds and other investors have been voting for climate change resolutions at the annual general meetings of polluting companies like Woodside and Santos. Resolutions can require companies to create and disclose plans to decarbonise their businesses.
When companies don’t do enough in response to climate change resolutions, an escalation framework is a tool that can be used to create consequences for companies that fail to act sufficiently in a specified timeframe.
These consequences can include voting to remove directors, or installing new directors, voting against director’s pay, voting against restructures, running public campaigns, or taking companies to court. It’s an effective tactic to pull a company into line.
An escalation framework was used to transform the energy company AGL who are Australia’s largest emitter of carbon. After they had failed to respond to shareholder climate resolutions a number of super funds publicly declared that they’d vote against AGL’s management at an upcoming meeting.
This forced AGL to refresh their entire board and replace their CEO, bringing forward the retirement of their coal power stations by more than a decade. They also announced they would invest in wind, solar and storage instead, avoiding 200 million tonnes of greenhouse emissions being released into the atmosphere in the process.
ART has said that they will train their board members on climate change every year, and link bonuses for key staff to achieving climate change outcomes. They have also said that next year, they will adopt a climate solutions target which is a goal for investment in climate positive businesses like solar and wind and green hydrogen. They are also set to develop a specific policy on oil and gas lending.
ART’s members have been taking action to urge the fund to act for many years now. They have pushed for ART to adopt a 2030 emission reduction target and a best practice escalation strategy. By writing letters, circulating petitions, asking questions at ART’s member meetings, and speaking up in news and social media, members forced ART’s hand through people-power. When we speak up, our super funds listen. Together we can push super funds to act on our behalf, using their influence as custodians of our money to turbocharge investment in renewable energy climate solutions and create a sustainable, thriving future for all of us.
Woodside and Santos are planning enormous new gas projects in Australia that would be a climate catastrophe. Emissions facilitated by Woodside’s Scarborough gas project would lead to the equivalent of around ten coal power stations per year. But Fossil fuel companies can and must transition to renewable energy or wind down production of coal, oil and gas.
The Danish national oil company recently completed a ten-year transformation where they went from being the country’s biggest oil producer to becoming a wind energy company, creating more value than the oil and gas industry in the process.
Woodside and Santos’ board and senior management have been in the oil and gas industry for a very long time, and appear very unlikely to shift course. However, last year one of Woodside’s board members was opposed by 35% of shareholders, despite the company posting massive profits that they gained as a result of the war in Ukraine. Next year there is every chance of a board reset at Woodside - depending on what superannuation funds and other investors do.
ART have not explained the principles of their escalation framework or said how they will report back to members on their actions. The super fund’s emissions reduction target should also be increased to match what the science tells us we need for a safe and liveable climate.
ART have acknowledged that they need to assess their dependence on nature, as well as their environmental impacts beyond climate, they are yet to do this.
Ahead of Woodside and Santos’ AGMs next year, ART should publicly indicate how they will approach their vote, in order to be transparent with their members.
One thing is for certain though, ART’s climate change plan is a huge leap forward for the fund and for the whole superannuation sector. This plan shows that the writing is on the wall for big polluting companies.
As a member of your super fund you have the super power to push your fund to use your retirement savings to tackle the climate crisis. Now is the perfect time to contact your fund and call on them to step up to the climate crisis, email your fund here.