Your super choice is super important.

Australian super funds manage billions of dollars and right now they are investing a staggering amount of this money – money that belongs to all of us, by the way – into fossil fuel projects.

Digging and burning fossil fuels like coal, gas and oil is the biggest driver of climate damage.

That’s not how you invest in people’s future!

Here’s the good news – super funds have a huge opportunity to protect our living world by moving the billions of dollars they're responsible for out of fossil fuels and into clean energy. Together we can move the money and invest in a climate safe future.

Get your business involved by switching your employee’s default super to a climate positive super fund or asking your current super fund to do better by our climate. Find all the info and resources you need to take action in this guide, below.

As hundreds of businesses across Australia – backed by the 700,000-strong ACF community – we have the power and the voice to shift the super funds and the billions of dollars they manage, and invest in a better future for all of us.

How your business’ payments can be a force for nature

Your business can help Australia recover, rebuild and renew simply by paying your employees. Super – that 9.5% on top of employee wages – comprises a large and highly influential component of the Australian economy.

As at June 2020, the Australian superannuation industry managed assets with a combined value of $2.9 billion or 1.5 times Australia’s GDP. It’s estimated that, within the next 20 years, super funds could collectively own up to 60% of shares in the ASX. 

Super funds invest your employees’ money in assets across Australia and globally, giving companies the capital to go ahead with either climate-destroying or saving projects. In exchange, super funds are given shareholder privileges and voting rights providing the ability to exert control over a company’s strategic direction. 

Superannuation can steer Australia’s economy towards decarbonisation

If between 2018 and 2030, super funds invested only 7.7% of their accumulated assets in renewable energy, Australia’s power sector could be fossil fuel-free by 2030! But to achieve a climate safe future, super funds must take this positive screen a step further.

In fact, climate positive super funds should exclude all fossil fuel investments by 2030 and commit to achieving net zero emissions by 2050 across their portfolio. 

Your business has an opportunity to shape which assets Australian super funds invest in by:

  1. choosing a climate positive super fund as the default fund for employees; or
  2. encouraging your current default fund to make climate positive commitments, if it hasn’t already. 

 

Which super funds are climate positive?

Right now, Future Super and Australian Ethical are the two most climate positive funds and are taking the strongest action to create a climate safe future.

Future Super’s investments already exclude all coal, oil and gas assets. Their current investment strategy is also already net negative carbon, so that your employees will avoid more carbon than Future Super’s portfolio emits.

Similarly, Australian Ethical excludes all companies whose main business is in fossil fuels as well as diversified companies who exceed their threshold revenue from fossil fuel activities.

Going beyond their divestment from all fossil fuels, Australian Super has committed to achieving net zero emissions by 2050 across its entire portfolio.

Other super funds that are beginning to transform their investments strategies to be climate positive include HESTA, Unisuper, and CBUS.

Each of these funds have committed to achieving net zero emissions by 2050. Taking this approach should mean that each of these funds will divest from all fossil fuels by 2030.

Unisuper and CBUS are yet to formalise and announce any divestment plans in line with their net zero commitments.

HESTA, on the other hand, has taken the first step towards fossil fuel divestment by excluding companies making more than 15% revenue from all thermal coal.

Although not quite climate positive yet, some funds are taking initial steps to get there.

Aware Super (formerly First State Super), for example, has excluded companies earning more than 10% revenue from thermal coal mining.

It hasn’t yet made a firm commitment to achieving net zero emissions although it has expressed an aspiration to transition its portfolio by 2050.

Christian Super and Local Government Super have at least excluded coal from their investments.

There are many factors you should consider when choosing a default super fund for your business.

This information is presented solely to distill super funds’ environmental commitments and inform your business of which funds are climate positive.

Encourage your super fund to be climate positive

Even if your default employee super fund is not climate positive, your business can still expedite the momentum towards fossil fuel-free superannuation. It’s as simple as a phone call or email!

Get in contact with your super fund to let them know that your business uses them as it’s employees default super fund but wants them to invest for a climate safe future.

You should point out that this means firstly divesting from all fossil fuel companies –- including coal, gas, and oil companies –by 2030  across their entire portfolio. Secondly, it means setting a net zero emissions target for 2050 for all of its investments.

These commitments should be backed in by taking active steps to achieve these targets. Ask your super fund to advise whether it will make these commitments and if so, when.

It’s important to highlight that climate positive action is a meaningful consideration in staying with your business’ default super fund and that you would consider switching if action is not taken in the short term.

Got a response from your super fund? 

If your super fund makes a positive commitment, congratulations! You can let ACF know about your win by emailing [email protected]

Sometimes, however, you may receive an obscure response that highlights other environmental action that your super fund is taking without the commitment you were asking for. We’ve distilled some of the generic responses you might receive & unpacked what this actually means: 

1. Our business’ default super fund has emission reductions targets. How can I tell whether this is aligned with the Paris agreement?

Awesome! Reducing emissions is a good step, whether that is in a super fund’s investments, operations, or both.

However, to ensure that the average global temperature doesn’t rise beyond 2°C, our economy needs to transition away from fossil fuels by 2030 and reach net zero emissions by 2050.

That means your super fund should be changing its investment strategy to achieve these clear targets. 

If your super fund has responded announcing other emissions reductions targets, you can respond by congratulating them for taking these initial steps.

But make sure you follow up with a kind reminder that to be a climate positive super fund, they must go beyond this. 

2. According to my super fund, only a small percentage of their assets are invested in fossil fuels. How can I fact check that?

Some super funds will share their specific investments publicly whilst others will only provide that information to current members. Follow up and directly ask them how much is actually invested (both in terms of percentage and dollar figures). 

3. My super fund says they’re actively engaging with target companies. What does this mean?

Some super funds are taking a more active role in their investments - using their shareholder privileges to influence the strategic direction of the companies they invest in. 

Ask your super fund which fossil fuel companies they have engaged with and what the responses were.

If those fossil fuel companies haven’t committed to exiting from coal, oil, and gas projects by 2030 after continued engagement from your super fund, it’s time for it to pull out it’s investments. Tell your super fund to divest. 

Remember – super funds can divest from select industries and have done so in the past with things like tobacco and weapons manufacturing.

Unsatisfied with your super fund’s response? Join ACF and thousands of supporters campaigning for the Australian banks and super funds to end their relationship with fossil fuels. 

Disclaimer: The information provided by the Australian Conservation Foundation does not constitute financial advice. It is presented to inform businesses motivated by environmental concerns and take action based on those concerns. The Australian Conservation Foundation is presenting this information solely for environmental ends.The information and actions provided by the Australian Conservation Foundation do not account for any individual’s or business’ personal objectives, financial situation or needs. It should not be used, relied on, or treated as a substitute for specific professional advice. The Australian Conservation Foundation recommends all users obtain their own independent professional advice before making any decision relating to their particular requirements or circumstances. Switching super funds may have unintended financial consequences.