AMP, AustralianSuper, Commonwealth Super Corp, Aware Super, and Australian Retirement Trust overstated their level of “effective engagement” with fossil fuel companies, according to a new report which accuses the super funds of greenwashing.
Greenwashing, where major companies mislead consumers and investors about their efforts to combat climate change, has become an increasingly important issue over the past months.
ASIC, the corporate watchdog, is currently prosecuting Mercer Super over its claims about sustainable investment options after announcing last year it was seeking to crack down on companies misrepresenting their green credentials.
Some super funds partially, or wholly, rely on the concept of active ownership to meet their sustainability goals. This refers to the practice of exerting influence over businesses they invest in to reduce emissions and counting those reductions as part of the funds’ own effort to cut carbon output.
In its report, published Wednesday, Market Forces alleges the five major super funds overstate their sustainability to retirement savers by claiming they support net-zero goals, but then failing to exercise their voting muscle to force fossil fuel companies to clean up their operations.
Brett Morgan, report author and Superannuation Funds Campaigner, said the report exposes the super funds for “failing to hold the most climate-damaging companies to account over their fossil fuel expansion plans.”
“There’s an appalling gap between climate commitments and real action by our biggest super funds and this is a slap in the face for members who deserve a safe future to retire into,” he said.
Market Forces says all five funds are relying on active ownership to meet their own climate targets.
It says that by not meeting a certain level of engagement with management of the companies they invest in the funds are exposing themselves to the possibility of legal action from ASIC or investors.
However, Market Forces did not specify what level of engagement it would consider satisfactory to prevent legal jeopardy.
AusSuper had more than 400 direct meetings with ASX300 companies last financial year, with climate change a key topic discussed at more than half.
Super funds commonly invest in fossil fuel companies despite their sustainability goals as they seek to generate the best possible return for members. Santos and Woodside, two of Australia’s biggest oil and gas producers, are listed as recipients of investment from the funds.
The involvement of the two fossil fuel giants was highlighted extensively by Mr Morgan who accused super funds of failing to bring the “climate-wrecking” companies into line.
He drew attention to the funds’ voting records on so called “crucial” climate-related shareholder resolutions and lashed them for supporting the companies’ “utterly inadequate climate plans” last year.
“Funds must step up to prevent fossil fuel expansion, and divest from companies that fail to respond,” he said.
“Too many super funds have their heads buried in the sand on meaningful climate action.”